Early-stage financing – ten years of successful disruption

A column by Dr Hubert Birner, Managing Partner, TVM Capital Life Science

Bildnachweis: TVM Capital.

The rethinking of the investment model in our industry began when the “pharmaceutical ecosystem” which framed our investment process began to transform, even before the financial melt­down in 2008. The pharmaceutical business model underwent major reconstruction, ultimately demanding much higher capital efficiency from venture firms like us.

At the same time, the biotech sector experienced major pressure from capital markets and was not anymore rewarded for the develop­ment of broad product pipelines. Anyone who then fundraised for biotech investments, especially when it came to early-­stage drug development, had to align the ­investment model to comply to the new ­trinity of investor expectation:

  • Increased capital efficiency,
  • reduced time to liquidity, and
  • improved asset quality.

The need to manage drug development in a significantly more cost-effective setup was fuelled by the expected patent cliff at big pharmaceutical players which signi­ficantly would affect overall sales.

Disruption on the horizon

In the light of the industry transformation, we started to define a novel, project-­focused strategic approach to develop single assets, combining our key investment skills and our operational network with pharmaceutical development expertise, ­financial resources and commercial/market insights. We succeeded in doing so when we entered a strategic partnership with Eli Lilly and Company and its operationally independent R&D group Chorus to work with our project-focused assets and apply a lean approach to generating high-quality clinical proof of concept data with a more flexible virtual development model. After this proof of concept is attained, others can pursue full regulatory development based on the knowledge gained in this ­accelerated and focused development strategy.

Value creation in the light of the new investment paradigm

We create value according to the above-mentioned three main guidelines by ­adding the experience of partners, with our innovative value proposition, and a highly differentiated and segmented ­investment strategy. Our investment ­approach is also very interesting for founders, entrepreneurs and management teams, as it provides a clear exit path with highly predictable equity outcomes based on a stringent timeline and clear mile­stone events for everyone involved.

Proof of investment concept

A significant part of our investment acti­vity in the last years went into project-­focused assets; another represented more traditional, later-stage venture capital ­investments. Both investment sleeves have been very successful to date, best ­exemplified by AurKa Pharma, which we exited after a holding period of roughly two years but with exceptional progress in the pre-clinical proof of concept.

The future is bright

When we started to execute on our new ­investment model concentrating on ­project-focused, single assets, we were quite convinced to be on the right track to meet the new trinity of investor expec­tations – however, as usual, the devil is in the detail, and our business is a complex one. Looking back now, we can safely say that we can check all the boxes that ­determine our success:

  • Is Big Pharma really buying back ­single-assets? – Yes, it is.
  • Is USD 15–20 million enough to get an asset to proof of concept? Yes, it is.
  • Is the model interesting for founders, entrepreneurs and management teams?

Absolutely, yes.

Currently, our professional life is very happy indeed – until the next industry transformation demands the agility necessary for change. We will be ready!


„Mehr Generalisten entdecken Life Sciences“
Dr. Hubert Birner
Managing Partner at TVM Capital Life Science

Dr. Hubert Birner verantwortet die Investmentstrategie von TVM Capital Life Science in Europa, Nordamerika und Kanada. Seine akademische Ausbildung umfasst ein Studium der Veterinärmedizin an der Ludwig-Maximilians-Universität München, gefolgt von einer Promotion in Biochemie, ausgezeichnet mit dem Hoffmann-La Roche Preis für Grundlagenforschung im Bereich meta bolische Störungen und eine Tätigkeit als Assistenz-Professor. Dr. Birner ist Absolvent (MBA) der Harvard Business School. www.tvm-lifescience.com