Fenwick & West Life Science Venture Financing Survey Shows Mild Improvement in Valuations Amid Overall Difficult Financing Environment

MOUNTAIN VIEW, Calif., Sept. 11, 2012 /PRNewswire/ -- Fenwick & West LLP, one of the nation's premier law firms providing comprehensive legal services to high technology and life science clients, today announced the results of its First Half 2012 Life Science Venture Capital Survey.

The First Half 2012 Survey analyzes the valuations and terms of venture financings for 186 life science companies headquartered in the United States that reported raising capital during the first half of 2012.

"For the first half of 2012, up rounds outpaced down rounds 53% to 19%, with 28% flat. This is a modest improvement over results from 2011, which averaged 47% up rounds and 25% down rounds, with 28% flat," said Matt Rossiter, a partner in the firm and co-author of the survey.

An up round is one in which the price per share at which a company sells its stock has increased since its prior financing round. Conversely, a down round is one in which the price per share has declined since a company's prior financing round.

The Fenwick & West Life Science Venture Capital Barometer™ – which measures the change in share price of life science companies funded during the year compared with the share price of their previous financing round – showed average price increases of 19% and 26% for Q1 and Q2 of 2012, in comparison to average price increases of 4% and 11% for Q1 and Q2 of 2011. 

"The Barometer results have continued to trend upward during 2012," said Rossiter. "This is a positive sign, and suggests that startups are continuing to develop promising technologies that can justify a step up in valuation. However, it is important to keep in mind that fewer life science financings are occurring, and the Life Science Barometer results continue to trail results for other industries covered by our Silicon Valley Venture Capital Survey."    

"The life science venture financing environment remains challenging," noted Barry Kramer, survey co-author and also a partner at the firm, "with investment into venture-backed life science companies falling off significantly from 2011, and fundraising by life science-focused investors also decreasing.  A potential bright spot, however, is that we are seeing some increased involvement by large life science companies in the venture funding process. This makes sense, as large pharmaceutical and medical device companies need a healthy life science start up industry to help fill their product pipelines, and with weakness in the venture side of the industry, it is both an opportunity, and maybe even a necessity, for the larger companies to become more involved with the start up environment."

Complete results of the survey with related discussion are posted on Fenwick & West's website at fenwick.com/lifesciencesurvey.

About the Survey

The Fenwick & West Life Science Venture Capital Survey, co-authored by law firm partners Matt Rossiter, Barry Kramer and Michael Patrick, offers a unique view of the life science venture capital market by providing insight into the changes in venture capital valuations and terms. By focusing on these trends, the Fenwick & West Survey complements the data reported by other industry sources, such as Dow Jones VentureSource and the MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

About Fenwick & West

Established in 1972, Fenwick & West LLP is one of the nation's premier law firms with extensive expertise in venture capital, public offerings and other corporate finance, joint ventures, M&A and strategic relationships, intellectual property, litigation and dispute resolution, taxation, antitrust and employment and labor law.

Contacts:

Matt Rossiter
Fenwick & West LLP
Phone: 415.875.2372
Email: [email protected]

Barry Kramer
Fenwick & West LLP
Phone: 650.335.7278
Email: [email protected]

Jennifer Shanks
Le@p! Public Relations
Phone:  408.827.8033
Email:  [email protected]

SOURCE Fenwick & West LLP