We have previously highlighted that most European venture capital funded therapeutic companies are acquired after receiving less than EUR 45M in venture capital funding.
It also appears that companies are acquired either before EUR 10M have been invested or after an investment in the range EUR 20-30M (figure below), possibly overlapping with a peak of M&A’s at the stage of Preclinical (11 of 43) and Phase II (23 of 43)!
The next peak in the figure below is after an investment of more than EUR 50M and again the majority stage is Phase II. Does this observation indicate that if you invest in interesting biology, and fail in Phase II, you will have the opportunity to invest more and with success try again in a new Phase II?
At Sunstone we think that is the case. We prefer opportunities with a broader investment thesis and we are hesitant about single assets with binary outcomes in Phase II.
When investing EUR 20-30M you should allow for the opportunity to learn something!
And as a curious side comment, it is interesting that only 6 out of the M&A’s were made after Phase I. Apparently human safety does not create sufficient value to cause an M&A 🙂