GHP September 2015

Device • There were four device acquisitions in Q2 after a surprisingly inactive first quarter that saw no activity. 2/4 acquisitions were by Medtronic, which appears to have gotten over its integration of Covidien and is back in the market. (We also saw the company make some equity investments.) Four M&A deals in July prime device to approach last year’s record number of transactions. • Average deal value was $112M, with a fairly defined range of $63M – $175M up front. This could be considered a cautionary tale for the companies raising $35M+ in equity, as so far there seems to be a fairly limited range in exit values. • There were four device IPOs in Q2, building off increased volume in Q1 (3 IPOs). • In 2014, there were 10 device IPOs, so the trend line here is very positive for an up-year — which matches our March prediction in the sector. • 2/4 had participation from crossovers in Q2, compared to no activity in Q1. • It is healthy to see crossover activity fuel IPOs, and the three large financings by crossovers in Q2 create a nice potential IPO pipeline. M&A IPO Private Financings Device Exits by Quarter Q1 Q2 Q3 Q4 Total 2013 IPO 0 0 0 2 2 M&A 1 2 6 2 11 2014 IPO 1 5 1 3 10 M&A 2 9 5 2 18 2015 IPO 3 4 7 M&A 0 4 4 Source: CB Insights, press releases and SVB proprietary data *Top 5 financings from Q1 and top 10 from Q2 to focus on most recent trends Series C 20% Series B 27% Series D+ 53% C.E. Mark 47% U.S. Commercial 40% Development 13% Device Crossover Activity: Participated in 4/15 Financings Device Development Stage Device Round of Financing Top 15* Device Venture-Backed Financings Range $20M - $57M Median $35.3M Exit Activity Comments on the report from Nooman Haque, Director of Life Science UK “The first half of 2015 has seen a continued growth in healthcare investments and exits in both the UK and US markets. Accord- ing to Silicon Valley Bank’s mid-year update on “Trends in Healthcare Investments and Exits”, this progress has been driven for the most part by non-VC crossover investors with a desire for biopharma and device businesses preparing for an IPO. The report, analysing venture-backed healthcare activity between January and June 2015, shows that the healthcare venture market is not just solid, it’s growing. With 24 biotech IPOs taking place within the first half of the year, a quarter of those raised more than $100 million. These are impressive figures, and have fuelled M&A activity in the sector. This activity however, has remained focused on early-stage businesses, with six out of the 11 M&A deals at the phase 1 or pre-clinical phase. As well as this, big pharmaceutical companies are increasingly keen to buy up innovative businesses developing new drugs and devices due to dwindling internal R&D pipelines. Driven by investor confidence, healthy access to capital and exit optionality, it looks as if 2015 will be the third consecutive year of strong activity for the healthcare sector as the ‘biotech boom’ is showing no signs of slowing down.”