Private Funding Trends Presentation - SVB

Venture Healthcare – Industry
Update
OIS
OCTOBER 2016

 Manage West Coast Healthcare Relationships
for SVB across the SVB Platform, including
 Fund of Funds (Investment as LP)
 Direct Equity (Co-Investments and Rights to Invest)
 Commercial Bank (Venture/Mezzanine Debt, Asset-based Debt,
New Fundings)
 Equity Financing Strategy for Early Stage and Venture-Backed
Companies
 Industry Thought Leadership
Jon Norris: Managing Director, SVB Capital
Jonathan Norris
Managing Director,
Healthcare
Silicon Valley Bank
Mobile 650.575.1377
jnorris@svb.com
Twitter: @jonnysvb
 Publications
 Trends in Healthcare Investments and Exits (2016)
 A Year of Dazzling Returns: 2015 Healthcare Investments
and Exits (2016)
 Trends in Healthcare Investments and Exits (2015)
 Strong Momentum in Healthcare (2013)
 First Mover Advantage (2012)
 Continued Rebound (2012)
 Trends in M&A (2011)
 Bringing Home the Bacon (2010)
Jon Norris, Managing Director, SVB Healthcare jnorris@svb.com

Healthcare Investment/Total Venture Investment
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1H 2016
Total VC
Dollars ($B)
$105 $41 $22 $20 $23 $23 $28 $32 $30 $20 $24 $30 $28 $30 $51 $60 $28
Biopharma 4% 9% 15% 19% 19% 17% 18% 19% 17% 19% 17% 16% 16% 15% 13% 13% 13%
Device 2% 5% 8% 8% 8% 9% 10% 11% 12% 13% 11% 10% 9% 7% 5% 5% 4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
$60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1H
2016
$Billions
Total VC $ % Biopharma % Device
$105
Source: PricewaterhouseCoopers & SVB Proprietary Data

Historical Trend Data for Device 2008 - 2Q 2016
20
40
60
80
100
120
$
$ 200
$ 400
$ 600
$ 800
$ 1,000
$ 1,200
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
US$m
investment deals
Source: PricewaterhouseCoopers

Device Investment Into Venture - Consistency since 2009
Year Device $ Invested Dollars as % of Total VC
2008 $3.6 Billion 11%
2009 $2.6 Billion 13%
2010 $2.5 Billion 10%
2011 $2.9 Billion 10%
2012 $2.6 Billion 9%
2013 $2.1 Billion 7%
2014 $2.7 Billion 5%
2015 $2.8 Billion 5%
1H 2016 $1.1 Billion 4%
2016E* $2.2 Billion (Down 22%?)
*Expected 2016E numbers extrapolated from 1H 2016 investment in device. Assumed 2x 1H2016 investments.
Source: PricewaterhouseCoopers

Capital Flow
Ratio
127% 368% 207% 189% 175% 149% 141%
HC $ Invested into Companies HC VC $ Fundraised Gap in Funding
0
1
2
3
4
5
6
7
8
9
10
11
2009 2010 2011 2012 2013 2014 2015
$Billions
$7.5B
$10.5B
US Healthcare: Venture Dollars Invested and Raised
Source: PricewaterhouseCoopers, Thompson Reuters, and SVB proprietary data

Total Series A ($M) $1,107 $862 $1,843 $1,296
CVC Deals % / # 28% / 17 27% / 20 26% / 23 30% / 22
BIOPHARMA
DEVICE
Total Series A ($M) $227 $337 $92 $147
CVC Deals % / # 18% / 7 14% / 6 22% / 4 6% / 2
Ophthalmology
3 deals
(all Biopharma)
2 deals
(1 each in Biopharma
and Device)
4 deals
(2 each in Biopharma
and Device)
2 deals
(all Biopharma)
US Venture Series A
60
75
87
74
2013 2014 2015 3Q 2016
#ofDeals
38 42
18
35
#ofDeals
Source: SVB proprietary data, VentureSource, Pitchbook.
*Q3 data as of 08/31/2016.

Most Active* Venture Investors in Device (2015 – 2Q 2016)
Most Active** Venture Investors in Biopharma (2015 – 3Q* 2016)
**Most active defined as top 61 investors based on new investments (duplicate investments removed)
Source: Pitchbook and SVB proprietary data.
*Q3 data as of 08/31/2016. 196 deals analyzed.
#ofDeals
27
18
15
14 14
10 10 10 10
0
5
10
15
20
25
30

45
17 14 17
12
7 4 5 4 4 3
10
3
3 1 5
1
1 1 1
12
3
4 3 2
2
0
10
20
30
40
50
60
70
80
Early Stage Late Stage Undesignated
72%
14%
14%
Early Stage
Late Stage
Undesignated
Most Active* Venture Investments in Device by Indication
(2015-1H 2016)
Most Active* Venture Investments in Biopharma by Indication (2015 - 3Q 2016)
#ofDeals
: Oncology, Orphan / Rare : CardiovascularTrends:
*Most active defined as top 61 investors based on new investments

7 5 4 3
Most Active** Venture Investors in Device (2015 – 3Q* 2016)
**Most active defined as top investors based on new investments (duplicate investments removed)
# of Deals

17 18 17
6
10
8
3 4
6
1
4
2
4
7
8
6
5
4
4
2
4 2
1
4
3
5 1
15
9
4
12
4
10
2
5
5 3
5 2
2
0
5
10
15
20
25
30
35
40
45
Early Stage Late Stage Undesignated
Most Active* Venture Investments in Device by Indication
(2015-1H 2016)
: NIM, Cardiovascular, Surgical : Asthetics / DermTrends:
#ofDealsMost Venture Investments in Device by Indication (2015 - 3Q 2016)
43%
24%
33%
Early Stage
Late Stage
Undesignated

Top 15 Crossover Investors:
Investments in Biopharma Decline Rapidly
2013 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Total
PRIVATE
INVESTMENTS
15 68 27 46 68 22 16 13 275
MOST ACTIVE CROSSOVER INVESTORS 1H 2016
INVESTOR DEALS
Deerfield Management 7
Fidelity Investments 4
Cormorant Asset Management 4
Sectoral Asset Management 3
Top 15 Crossover Investors: Adage Capital Management, Casdin Capital, Cormorant Asset Management, Deerfield Management, EcoR1 Capital, Fidelity Investments,
Foresite Capital Management, Jennison Associates, Perceptive Advisors, RA Capital Management, Redmile Group, Rock Springs Capital, Sectoral Asset Management,
Wellington Management, Woodford Investment Management
Source: Pitchbook, press releases and SVB proprietary data.

$4.5 $4.1
$6.6
$4.3
$5.4
$8.0
$10.0
$7.9
$0.9 $1.1
$1.0
$1.8
$0.8
$1.0
$2.2
$2.4
$0.1 $1.5
$1.2
$2.1
$8.8
$12.1
$11.6
$3.2
0
2
4
6
8
10
12
14
16
18
20
22
24
2009 2010 2011 2012 2013 2014 2015 3Q 2016
TotalValue($Billionis)
Big Exit Upfront Payments Big Exit Milestones to be Earned Pre-Money IPO Value
2016: Projected numbers will
likely not keep pace with 2015
*Potential distribution calculated as 75% of Upfront Payments, 25% of Milestones, and 75% of Pre-Money IPO Value
Source: Pitchbook, VentureSource, press releases, discussions with life sciences professionals and SVB proprietary data.
*Q3 data as of 08/31/2016.
Potential Distributions* From VC-Backed IPOs and M&A
(2009 – Q3 2016)

VC-Backed Biopharma Exits by Quarter 2013 – 3Q 2016
Q1 Q2 Q3 Q4 Total
2013 IPO 3 10 13 8 34
M&A 3 3 3 3 12
2014 IPO 24 12 17 13 66
M&A 3 4 6 1 14
2015 IPO 11 12 9 10 42
M&A 7 4 6 4 21
2016 IPO 7 8 5 20
M&A 5 5 2 12
Source: Pitchbook, press releases, and SVB proprietary data.
*Q3 data as of 08/31/2016.

1 1
5
7
3
4
2
3
4
6
3
5
4
9
2
1
2
1
6
2
1
1
0
2
4
6
8
10
12
14
16
18
20
2012 2013 2014 2015 3Q 2016
#ofBigExits
VC-Backed Biopharma Exits by Stage since 2012
Source: Pitchbook, press releases, and SVB proprietary data. 2015 deals excludes one deal falling under the ‘Non-approved’ life stage category
*Q3 data as of 08/31/2016.

Year 2012 2013 2014 2015 3Q 2016 Total
Pre-Clinical 1 1 9 9 3 23
Phase I 0 8 20 9 8 45
Phase II 3 13 26 17 2 61
Phase III 6 8 6 6 5 31
Dev Stage -
Veterinarian
0 2 0 0 0 2
Commercial 0 2 5 1 2 9
Total 10 34 66 42 20
43% of early stage IPOs in 2015 were Pre-Clinical or Phase I
55% of early stage IPOs in1Q-3Q 2016 were Pre-Clinical or Phase I
*Q3 data as of 08/31/2016.
VC-Backed Biopharma IPO’s by Stage (2012 – 3Q 2016)

VC-Backed Biopharma IPOs:
Median Pre-Money and Dollars Raised (2012 – 3Q 2015)
2012 2013 2014 2015 3Q 2016
# of IPOs Raised Over $100MM 1 8 44 13 1
% of IPOs Raised over $100MM 10% 24% 67% 31% 5%
$61
$113
$91
$126
$54
$202
$182
$140
$193
$181
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
2012 2013 2014 2015 3Q 2016
Median $ amount (millions)
Biopharma IPO $ Raised Biopharma Pre-money
*Q3 data as of 08/31/2016.

2008 2009 2010 2011 2012 2013 2014 2015 Q3 2016
Upfront $: Median ($M) 200 200 148 190 125 213 225 200 133
Total Deal $: Median 285 403 325 338 375 452 413 580 600
VC-Backed Biopharma Private M&A since 2008
3
11 10
13 13
9 9
12
7
6
2 4
2 2
3
5
9
5
0
2
4
6
8
10
12
14
16
18
20
22
24
2008 2009 2010 2011 2012 2013 2014 2015 3Q 2016
#ofBigExits
*Q3 data as of 08/31/2016.

2011-Q3’16 Number of Exits
Stage:
Pre-clinical / Phase I / II / III
/ Commercial
Median Years to Exit
Oncology 23 8 / 6 / 7 / 1 / 1 4.7
Neurology 14 4 / 1 / 5 / 1 / 3 4.2
Respiratory 8 - / 2 / 4 / 1 / 1 5.0
Aesthetics / Derm. 8 - / 2 / 4 / - / 2 3.2
Cardiovascular 7 1 / 2 / 1 / - / 3 5.9
Auto-Immune 5 2 / 2 / 1 / - / - 3.7
Anti-Infective 5 1 / 3 / 1 / - / - 5.6
Orphan / Rare 4 1 / 1 / 2 / - / - 1.4
Ophthalmology 3 - / - / 2 / 1 / - 4.1
VC-Backed Biopharma M&A >$50M since 2011
Pitchbook, Venture Source, press releases & SVB Proprietary Data.
Median Multiple calculated at 85% of value divided by venture equity.
*Q3 data as of 08/31/2016.

VC - Backed Device M&A >$50M
VC-Backed Biopharma M&A >$50M
2011-Q3’16
Median $
Invested ($M)
Median $ Up-
Front
($M)
Median $ Up-
Front
Multiple* on
VC$
Median $ Total
Deal
($M)
Median Total
Deal Multiple*
on VC$
Oncology $41.0 $225 5.8x $600 10.6x
Neurology $50.4 $183 3.0x $555 7.2x
Respiratory $35.6 $147 3.5x $453 6.1x
Aesthetics / Derm. $27.7 $90 3.2x $320 12.7x
Cardiovascular $63.0 $200 4.4x $700 24.6x
Auto-Immune $27.0 $225 3.5x $325 10.2x
Anti-Infective $40.0 $325 9.4x $464 9.4x
Orphan / Rare $43.0 $128 2.9x $253 6.6x
Ophthalmology $42.0 $160 1.9x $300 6.8x
Pitchbook, Venture Source, press releases & SVB Proprietary Data.
*Q3 data as of 08/31/2016.

VC-Backed Device Exits by Quarter 2013 – 3Q 2016
• Since Q2 ‘15, there have been at least 3 or more M&A device big exits every quarter
Q1 Q2 Q3 Q4 Total
2013 IPO 0 0 0 2 2
M&A 1 2 6 2 12
2014 IPO 1 5 1 3 10
M&A 2 9 5 2 18
2015 IPO 3 4 3 1 11
M&A 0 4 9 4 17
2016 IPO 0 0 0 0
M&A 5 4 3 12
*Q3 data as of 08/31/2016.

VC-Backed Device Exits by Stage (2012 – 3Q 2016)
Source: Press releases and SVB proprietary data. 2014 data for big exits excludes one Canada Commercial deal.
*Q3 data as of 08/31/2016.
Non-Approved CE Mark U.S. Commercial
Represents # of IPOs Represents Big Exits
3
1 1
5
2
3
3
1
6
3
8
8
15
6
7
0
2
4
6
8
10
12
14
16
18
2012 2013 2014 2015 3Q 2016
#ofBigExits
1 2
7
1
2
8
1
2

VC-Backed Device Exits by Indication (2012 – 3Q 2016)
Source: Press releases and SVB proprietary data.
*Q3 data as of 08/31/2016.
6
1 1 2 1
4
2 3
3
3
1
7
10 7
8
2
2
1 10
2
4
6
8
10
12
14
16
18
# of deals
Non-Approved CE Mark U.S. Commercial

2011-Q3’16 Number of Exits
Stage:
Dev/CE/US
Median Years to Exit
Cardiovascular 19 6/6/7 6.3
Surgical 18 1/2/15 7.2
Vascular 15 1/4/10 6.4
Orthopedics 9 0/0/9 9.2
Ophthalmology 7 2/3/2 8.2
Neuro 5 2/3/0 5.6
Imaging 4 0/0/4 11.0
Aesthetics 4 0/0/4 4.0
VC-Backed Device M&A >$50M
Pitchbook, Venture Source & SVB Proprietary Data.
*Q3 data as of 08/31/2016.

VC - Backed Device M&A >$50M
VC-Backed Device M&A >$50M
2011-Q3’16
Median $
Invested ($M)
Median $ Up-
Front
($M)
Median $ Up-
Front
Multiple* on
VC$
Median $ Total
Deal
($M)
Median Total
Deal Multiple*
on VC$
Cardiovascular $36.5 $124 2.6x $250 5.7x
Surgical $36.3 $117 3.4x $180 3.7x
Vascular $33.5 $135 3.2x $220 7.3x
Orthopedics $53.1 $120 1.8x $130 2.1x
Ophthalmology $61.8 $240 2.7x $400 4.8x
Neuro $42.0 $175 2.6x $200 2.6x
Imaging $68.2 $111 1.3x $111 1.3x
Aesthetics $6.5 $338 14.5x $338 14.5x
Pitchbook, Venture Source & SVB Proprietary Data.
*Q3 data as of 08/31/2016.

Ophthalmology #4 Indication in Device and
Biopharma Exits since 2013
Source: CB Insights, PitchBook, press releases and SVB proprietary data
*Through August 31, 2016
In venture-backed
Big Exit M&A and
IPOs, Ophthalmology
is in the top 5 in IPOs
and M&A
Overall (M&A + IPO),
Ophthalmology is the
#4 indication with 21
exits
VC-backed Big Exit M&A and IPO by Indication 2013 – 3Q* 2016
IPO Big Exit M&A
Oncology 36 Cardiovascular 18
Neurology 24 Oncology 15
Orphan/Rare 16 Neurology 12
Anti-Infective 12 Ophthalmology 10
Ophthalmology 11 Surgical 10
Cardiovascular 11 Vascular 10

Predictions in 2016 into 2017
• Investment into venture backed healthcare companies will be close to record 2016 numbers, with
Biotech leading the charge.
• Fundraising down in 2016, but significant fundraising from 2014-15 means that healthcare venture
industry is well funded.
• Series A investment is up in all sectors.
• Biotech M&A and IPOs continue to be early stage, though M&A numbers and up front dollars are
slightly down.
• Device M&A numbers continue to be remarkably consistent.
• IPOs Market Stays Open in Biotech but Not at 2015 Pace – Potential for some Device IPOs in Q4.

Private Funding Trends Presentation - SVB

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