Ax3.Bio: Your new partner in Life Science Investment

Ax3.Bio was founded with the sole purpose of helping investors during their investment decision process in the Life Science industry. This industry is one of the riskiest since most of them are long shot with high uncertainty and low probability of success. Before I continue with our story, I´d like to show you some facts as background information. The number and value of the company deals have been increasing since 2016 injecting in 2020 more than USD 20 B and getting almost 100 IPO.

If we analyze the value of each round by subsector we can see a positive trend in all of them, having the Therapeutic sector with the highest deal value, with an average / median Series A round of $36M / $24M, and the average/median Series A post-money of $79M / $48M.

All the aforementioned information was just to state the obvious, the valuations are getting higher and higher and the methods currently being used have a lot of weaknesses and sometimes due to the hype, people tend to assess those companies with a lot of biases.

Before starting to mention what we do at Ax3.Bio, I´d like to take you on a small tour to June 2020, one biologist and two economists were having a virtual coffee to talk about their ideas, the 3 of them had a lot of experience in the industry, from different perspectives, science, business and financial. There's no business without science, no financials without a great business model, and no science that can go further without understanding finance. If you take a look at the industry, 95% of life science companies fail and the top reason is… yes, you got it perfectly: “Financial strategy” this issue makes really difficult to investors to fully assess the startup potential. After a couple of weeks of brainstorming, we thought about interviewing several actors in the industry (using the first step from design thinking, and yes we also use lean methodology), VCs, CVCs, bankers, accelerators, etc. to understand how they assess their potential investments. Some of them do it all in-house, some of them use a 3rd party but none of them assess the science, business, and finance in synergy, which means that is that most of them analyze the science in one compartment, the business in another, and finally, they use static methodologies like example DCF, the multiple or the VC approach.

This industry is so dynamic that you need to use methods that give you the possibility to pivot and re-assess a strategy as managers or directors. After talking with more than 100 people we thought that there was a space to add more layers of information in order to decrease the risk and uncertainty while increasing revenue.

We want to show you the unknown unknowns in the industry to fully understand a company or a portfolio´s potential by relying on 3 concepts: Science and Market Analysis, Risk Profiling & Valuation, and exit strategy. Our differential is that we get a deep understanding of the science and business and parametrize all the important variables like state of maturity, intangible assets like patents, and probability of success into dynamic modeling using any of the following methodologies: Real Options Valuation, Multiple Criteria Decision Making (MCDM), Monte Carlo Simulations, Hybrid Models with Advanced Analytics.

This may be new for a lot of people, due to the fact that these methodologies are not currently being used because most people think it is too difficult or the information asymmetry makes it impossible to apply. The good news is that our methodology gives you better results in situations where there's a high level of uncertainty. Just to mention an example, intangible assets in life science companies tend to be a huge part of the actual value and they can only be assessed using our methods.

There's a saying that we need more finance in science and more science in finance, Ax3.Bio is our answer to this quote.

Are You Ready to Strengthen Your Portfolio?

References:

1 DealForma, data as of 1/7/2021. Healthcare and Life Sciences sector coverage across biopharma, medtech, device, diagnostics, tools, CDMOs, and related companies. Financials based on disclosed figures. M&A are for whole company acquisitions (or majority acquisitions) and not product, pipeline, or business unit purchases. Excludes terminated offers. Partnerships involving development and commercialization, joint ventures, options to license, partnerships with an option to acquire the company, and research partnerships. Excludes regional sales/distribution only and academic/government deals.

2 Source: DealForma, data as of 1/7/2021. Healthcare and Life Sciences sector coverage across biopharma, medtech, device, diagnostics, tools, CDMOs, and related companies. Financials based on disclosed figures. Multiple tranches of the same Series are counted as one together.

3 https://www.baybridgebio.com/blog/ipo_2018_q12019.html