Picking the right exit

Attributes that support an IPO exit:
• Proof-of-concept clinical data on lead drug candidate - typically robust Phase IIb or later data that provide substantial evidence of efficacy and safety.
• Legacy pharmaceutical partner to provide validation.
• Defined near- to intermediate-term news flow, with clear data points and events that will drive stock price accretion for new investors.
• Drug candidate that addresses large potential market opportunity

Attributes that support an exit through an acquisition by a larger company:
• Proof-of-concept clinical data on lead drug candidate – typically interesting Phase II data, and sometimes earlier-stage than demanded by IPO investors.
• Full rights retained to many or all compounds in the pipeline.
• Promising, broad technology platform with the potential to generate multiple new drug
candidates.
• Company’s equity is undervalued relative to perceived potential or milestone payments
a legacy pharmaceutical acquirer might already be obligated to pay under a
previously existing partnership.
• Drug candidate addresses large potential market opportunity that fits well with potential
acquirers’ existing product portfolios.

Sam Hall is an Associate and Alastair Wood is Managing Director at Symphony Capital New York, NY.