DPELC-MSL Speaker Series: Evonne Sepsis, Founder and Managing Director, ESC Advisors

The DPELC-MSL Speaker Series continued last month with a talk by Evonne Sepsis, the Founder and Managing Partner of ESC Advisors, a boutique healthcare investment bank focused on the life sciences sector for emerging growth and mid-cap companies both in US and in Europe; ESC advises on both financings and M&A. Evonne is an alum of Northwestern University and the Yale School of Management, and she has been in investment banking for almost 20 years. She founded ESC Advisors in 2009.

Evonne spoke about the process of securing investments in biotechnology and her role in the process. She noted that drug development is a capital- and time-intensive undertaking, mainly due to the need for clinical trials that must ensure a drug is safe and effective. She described drug development as “high risk and high reward” – it can cost over $1B and take as many as 10 years to develop a drug. Early stage biotechnology companies base their successful development on the outcomes of their clinical trials – that is their essential data.

Despite the challenges, Evonne noted that we are currently experiencing unprecedented innovation in biotech – a “tsunami of new innovation.” The hope of science is becoming a more concrete reality.  One reason this is such a fascinating time is that the industry is focused not just on treating symptoms, but on creating cures for patients.  There are advances in central nervous system, the microbiome, the immune system, and aging, to name a few areas. (Really hoping for a cure for aging!) In addition, progress is being made with underlying technologies, including immune-therapies and also gene and cell therapies. Evonne noted in particular today’s focus on Covid-19, with hundreds of ongoing trials including anti-inflammatories, antibodies, antivirals, and vaccines.

So where does Ms. Sepsis come into the equation? From the description of her work that she provided, she is part advisor, part matchmaker, and part jack-of-all-trades. In the advisor role, she guides companies through a number of different areas, including company strategy and business plan, valuation, analyzing the competitive landscape, developing networks, raising capital for companies, charting a course for clinical trial development and use of proceeds, providing business development services, and planning for partnership, licensing agreements, and exit strategies. Though one of her main functions is helping companies raise capital, there’s a lot of work she has to do up-front – in conjunction with the management team – to prepare for a financing.

Once a company is ready to present to investors, Evonne’s role shifts to finding the right investor and/or syndicate.  This is where her knowledge of the company and also her network comes into play. She has to evaluate the strength of a company or product and match that company and the product’s particular phase of development with the right investor. Some investors invest in every stage, but many are known for investing mainly at one stage or another, or building their own companies. It is sometimes easier to match investors at the early stage (phase I) and later stages (post-Phase II) than it is in Phase II, when there may be some efficacy shown, but still many unanswered questions.

Evonne mentioned the importance of relationships in helping companies find the right investors – both the relationships that she has developed through prior experience and networks, and also the relationships that advisors, an effective Board of Directors, and a good scientific advisory board can provide.

The jack-of-all-trades role is important throughout the development life cycle. There are so many aspects to the process, including regulatory, intellectual property, financial projections, pricing, clinical trials, the competitive landscape, and many more.  While she can’t be an expert on all of these things, Evonne has to be well-versed in a variety of areas, and she has to know who to reach out to in each of these areas, because investors care about all of these things when deciding to invest.

A few other takeaways from the talk:

  • Throughout the process, it is important to keep exit strategies in mind, such as IPOs and M&A. There is currently a big uptick in IPOs; Evonne described the IPOs in the biotech market as “very healthy.” A robust IPO market and a strong M&A market can help to accelerate investments in earlier stage biotech companies.
  • Having a strong team that can manage all aspects of the process is key to a product’s success and also to attracting investments. With such a multi-faceted process, and the need for so many different kinds of expertise (e.g. scientific, business development, financial, strategic, clinical, etc.), it is quite a challenge – but also quite important – to have a team members with different backgrounds and strengths. Also important are good term sheets and clear governance schemes, particularly with regard to ownership and voting.
  • Ultimately, the biggest determinants of product success are a strong team and leader, and also, of course, the underlying science. And with regard to the latter, the most important thing is the data, mainly, the data generated by clinical trials. The goal is always to develop a story based on the data; that is what will attract investors and make it more likely that a product is approved and used to treat patients.
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