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Investing in Life Sciences: Demystifying Drug Development

Posted by Accelerate Fund | April 13, 2023

Left to right: Yasmine Al-Hussein, Yaletown Partners/Accelerate Fund; Jamie Lucien, Vesmyr Life Sciences; Christian Idicula, KASTx Ventures; Mark Abel, Aurinia Pharmaceuticals, and John Porter, Vesmyr Life Sciences.

For investors interested in exploring high-potential startups in Alberta or investing in tech that impacts our well-being, life sciences is an area of huge opportunity.

With Nobel prize-winning technologies from the University of Alberta, major investments in Edmonton as Canada’s pharmaceutical hub, and several companies already successfully commercialized and exited – Alberta punches above its weight in this area. According to the Start Alberta dealflow database, Alberta is currently home to 77 verified life sciences companies.

So why are so many investors still sitting on the sidelines?

Talking with other investors, we discovered the main hurdles were a lack of understanding of how to evaluate business growth and how to make a return on their investment.

To help demystify the investment opportunities in this rapidly-growing sector, Accelerate Fund’s Investment Manager Arden Tse teamed up with some of Alberta’s experienced drug developers and venture capital/life science investors to produce a video that sheds light on how to evaluate life science investments.

The funding gap for life science companies

“As an investor, you want to invest in an area where there are opportunities and where you see a market developing. Life sciences are one of the major areas with potential in tech for commercialization and growth right now,” explains Arden. “If you’re looking for big exits and high growth, this sector is one area where it is possible because of the importance of human health and the size of the market. There can be higher risk, but also higher reward.”

It’s an area that’s gaining significant investor attention including from Accelerate Fund II & III, and KASTx Ventures, who are actively pursuing more opportunities.

Additionally, Startup TNT’s Life Sciences Summits continue to draw angel investment into Western Canadian life sciences companies like All Skin, Mach32, Difinity, BioMimir, Nanostics and Qualisure Diagnostics.

Still, there is room for more investment and for more angel and institutional investors.

“For early-stage life science companies, there is a funding gap after they’ve exhausted all possible government grants and before a fund comes in,” notes Arden. “Bringing more capital to support these life sciences companies’ growth and progress towards commercialization could really be a significant contribution to our economy. I believe the sector has a lot more potential.”

What you need to know when evaluating a life sciences company

Accelerate Fund has developed a sub-investment thesis for investing in life sciences companies and aims to have these companies fulfill approximately 20% of our investment portfolio. It took our team some time and work to develop the competency and methodology to evaluate these companies. But we have skilled up with education and partnerships, and plenty of other investors can too.

What’s different with life sciences? For one, the sector is very broad, from biotechnology such as pharmaceuticals and drug development to medical devices, therapeutics diagnostics, and digital medicine.

Traction or success indicators to look for also differ. Software is generally straightforward, you look at revenue. But many early-stage life science companies don’t have revenue.

When we’re looking for signs that the company is growing, it comes down to:

  • The value created by good data
  • Achieving growth milestones
  • The multidisciplinary team and how well they work together

Round table of experts share advice on evaluating life science companies

Ready to jump off the sidelines and learn what to look for in strong life science companies? Hear from local experts in this 45-min video conversation.

Produced by Arden and with help from our friends at Startup TNT and the Edmonton Regional Innovation Network, this video offers a rare opportunity to hear a round table discussion with some of Alberta’s top drug development experts and local investors invested in the life sciences including:

round table discussion with some of Alberta’s top drug development experts and local investors invested in the life sciences

Hear valuable insights about the drug development process, patent strategies, business milestones, and regulatory considerations. Each expert brings a unique perspective and offers insights from real-life experience.

“Jamie’s an intellectual property lawyer who has worked in life sciences his whole career. John has years of experience in commercializing medical technologies and evaluating markets. Mark is a very well-respected chemist and one of the few people in Alberta with experience in chemical manufacturing and has taken a drug from idea all the way to market. Yasmine and Christian offer insight into what kind of questions to ask as an investor and how to evaluate a company that doesn’t have revenue,” explains Arden.

Watch the video: Investing in Life Sciences: Demystifying Drug Development

This project is sponsored by Startup TNT and the Edmonton Regional Innovation Network through Alberta Innovates.

Co-invest in life sciences with Accelerate Fund III

Accelerate Fund III has invested in several Life Sciences companies to date and we are actively looking for more deals. Our team performs the due diligence and makes the investment decisions. For qualified angel co-investors, we share our due diligence.

Are you an investor interested in joining us on a deal? Get in touch with our team to find out more.

We’re curious, did you find this video helpful? What other topics on investing would you like to see? We’d love to hear from the investor community. Send us a note at info@acceleratefund.ca.

 


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info@acceleratefund.ca