Alacrita is frequently engaged by VCs and PE funds to provide objective valuations and due diligence assessments to support investment decisions, as well as early-stage expertise and operational support for NewCos., on an as needed basis. As a multi-disciplinary provider of consulting services to the pharmaceutical industry, our expertise spans each stage of life science product and company development, uniquely positioning us as a partner able to evaluate scientific, operational and commercial variables, and also support the organizations with precisely-relevant expertise tailored to its specific stage.
Our core team leverages a subject-matter expert network of more than 500 specialist consultants, allowing us to incorporate expertise into projects, direct from individuals with first-hand experience in the technology and disease area(s) of a particular asset or company.
In addition to targeted expertise, investors also benefit from the enhanced strategic insight we bring to each project, gained from our multi-disciplinary and multi-stage consulting work within the industry. This allows for high-granularity in our assessments.
Whether you're a VC, a family office, or a PE fund, we understand how critical it is to fully understand the risks and complexities associated with any potential life science investment. Our extensive industry background and work experience allow us to provide that understanding, so that you have the information necessary to effectively evaluate the opportunities before you.
Alacrita also works with investors to help operationalize early-stage organizations and supply them with critical expertise, on an as-needed basis. This allows the organization to obtain the expertise it needs to move product development forward, at a time when it may not be ready or practical to bring on additional full-time team members.
Within our expert network, we have a full range of high-calibre life science professionals frequently available for such assignments, including over 200 MDs, many of them CMO-caliber with hands-on clinical development experience.
We have experience working with a range of therapeutic areas and technologies:
The below selection of projects can help illustrate the type of support we typically provide to investors:
- Investor due diligence on clinical stage oncology therapeutic company: A VC investor asked Alacrita to conduct due diligence on a clinical stage oncology therapeutic company developing a targeted inhibitor that works via the notch pathway. Priority indications included rare oncology (solid and liquid) indications, and a biomarker approach was being pursued which required a companion diagnostic to be developed, to ensure targeting of the drug to the appropriate patients. Before the client made a commitment to invest in the oncology company, it wanted some external due diligence.
- Leveraging valuations expertise as a BOD observer: A private equity (PE) investor was looking for a partner to be retained as an observer on the board of a regenerative medicine/advanced wound-healing company.
- Valuation of a drug discovery company with Monte Carlo simulation: A drug discovery company preparing for a forthcoming funding round wanted to update a valuation of the business based on a series of contract research projects and the proprietary value in its other research collaborations, and to understand which projects would maximize longer term value.
- Providing due diligence to a major pension fund for an Alzheimer’s treatment: Our client, a major pension fund, was considering an investment in a Phase III neuroscience company, which was developing a small molecule to provide symptomatic relief of Alzheimer’s Disease (AD). Our client wanted to know the likelihood of clinical success in an ongoing Phase III clinical trial, therefore, one of our neuroscience consultants was selected to provide expert advice.
Due diligence on a novel T cell therapy and discovery platform for a VC: A VC investor wished to make an investment in a California-based preclinical biotechnology company with a discovery platform and novel T cell therapies for cancer and other diseases and required a technical due diligence on the company.
Due diligence of a biopharma company for a government-owned investment firm: A government owned investment firm was considering an investment in a biopharma company developing a therapeutic monoclonal antibody against a novel immuno-oncology target. Alacrita was asked to assist with due diligence expertise.
- Evaluation of Phase III probability of success for a private equity fund: A private equity fund approaching an investment in a Phase III asset required an expert evaluation of the likelihood of success in the Phase III trial. The molecule, targeted at two CNS indications, had been extensively tested in Phase II and an inconclusive Phase III study, and the investor needed to understand whether the rationale and current understanding of the product, taken together with the totality of data developed to date, provided sufficient support for investing in a further pivotal trial.
Quick-fire technical due diligence exercise on a US-based drug re-purposing company: An Asia-based VC firm was interested in a US-based drug re-purposing company and asked Alacrita to perform a quick-fire technical due diligence exercise to help the firm make an informed decision about whether to proceed to full formal due diligence.
Technical and commercial due diligence of antibody against metastatic cancers: A VC firm was exploring investment in a spin-out company with an antibody targeted at metastatic cancer indications. Before committing to the financing round, the investor required independent due diligence be performed. Leveraging our network of experts, Alacrita performed due diligence on both the technology and the commercial strategy of the target company.
Due diligence for a family office considering reinvestment in VC-backed biotech: A family office that had invested in a VC-backed company sought Alacrita's expert view of prospects for re-investing in the company following a Phase III trial failure in the immunology space. The company had spent over a decade developing its technology and had conducted an extensive series of clinical assessments that had yielded inconsistent results.
Due diligence of a plasma protein manufacturer for a PE investor: A private equity investor was considering a transaction in a company supplying therapeutic proteins derived from biological sources for the treatment of numerous diseases in the neurological, autoimmune, hematological and other rare conditions. The target was a mature company operating in a well-developed sector of the industry. The PE investor commissioned Alacrita to conduct in depth technical, regulatory and market due diligence recognizing that its traditional DD providers lacked the specialized expertise and hands-on experience that Alacrita can provide.
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Biotech investment case studies
I. Due diligence on a novel T cell therapy and discovery platform for a VC investor
Challenge: A VC investor wished to make an investment in a California-based preclinical biotechnology company with a discovery platform and novel T cell therapies for cancer and other diseases. Alacrita was commissioned to use its experience in cell therapeutics to perform a technical due diligence on the company to highlight any key risks and to propose mitigation strategies.Solution: Alacrita reviewed information provided by the client and compiled a report, analyzing the following key areas in the technology platform and therapeutic programs:
- Therapeutic focus
- Molecular targets
- Scientific rationale
- Pre-clinical data
- Clinical development plans
- Competitive landscape
- Market opportunity
- Company infrastructure
Upon further discussion with the target company on issues raised during the initial review and analysis, we finalized our report to the investor summarizing the above points and outlining the key risks in the programs. The company agreed that the identified risks were indeed material, and one of the predicted issues occurred shortly after our report was finalized.
II. Leveraging valuations expertise as a BOD observer:
Challenge: A private equity (PE) investor was looking for an Alacrita partner to be retained as an observer on the board of a regenerative medicine/advanced wound-healing company.
Solution: Because of his industry expertise, and strategic understanding gained through a long association with companies in similar stages of development, our partner contributed to the board of director discussions. He was also able to draw on the experience of our other consultants during these meetings and over the course of this long-term assignment we were also engaged for the following items:
- Develop a valuation of the company based on analysis of comparables (albeit very few relevant examples available), a review of a discounted cash flow analysis and general market valuations for life science companies outside the field, but at a similar stage of corporate evolution. This required specialist expertise in the company’s technology and a deep understanding of valuation as applied to a company at this stage of development.
- Update our original due diligence report, written 30 months before, assessing the degree to which the new management team had achieved the planned strategic and operational transformation of the company. We were able to make an objective and accurate assessment because our partner understood the challenges and realities of managing a company to deliver results. This was presented to the private equity investment committee as a core part of its exit decision.
- Identify and assess corporate milestones over the coming 12-24 months, highlighting those that could underpin value inflection points and others of strategic significance. Once again, this activity relied on our partner having real industry experience in senior management roles.
III. Due diligence of a healthcare communications agency account portfolio for a private equity firm
Challenge: Our client, a private equity firm, was looking to invest in a UK-based global medical communications agency. The agency had a diverse client base including a series of big pharma and biotech clients. Our client was keen to understand the technical and market risks associated with the agency’s product-based accounts, as a significant loss would represent a short-term setback to the business. The firm asked Alacrita to conduct due diligence on the major products in the agency’s portfolio.
Solution: Using several publicly available and proprietary sources, Alacrita developed a profile for each of the chosen major products in the agency’s portfolio including an assessment of current development status, ongoing or planned clinical trials, and current sales as well as sales trajectory. Alacrita also conducted an analysis of marketed and pipeline competitors to understand where each portfolio product lays in the playing field, as well as a view on the impact of patent expiry and threat of generic/biosimilar competition. Each product profile was scored commercially and technically in order to develop a risk profile for each.
IV. Due diligence of a biopharma company for a government-owned investment firm
Challenge: A government-owned investment firm was considering an investment in a biopharma company developing a therapeutic monoclonal antibody against a novel immuno-oncology target. Alacrita was asked to assist in a due diligence exercise.Solution: Alacrita's immuno-oncology expert conducted the following activities:
- Reviewed non-clinical data, FIH protocol, clinical development plan and investigator brochure
- Reviewed literature on the novel target
- Interviewed company executives
- Provided a written overall evaluation and summary of the scientific, clinical and regulatory risks and opportunities in the context of industry benchmark probabilities of success.
The target company successfully raised its Series B investment.
V. Due diligence for a VC considering investment in a biotech spin-out
Challenge: A UK-based VC wished to invest in a biotech spin-out focused on the development of R&D tools using induced pluripotent stem cells (iPSCs) as organoids to mimic human tissues. These ready-to-use assays were primarily developed for use in drug toxicity testing, including retinal, renal and skin cell assays. Before committing to an investment, Alacrita was asked to perform a due diligence assessment of the technology and company.
Solution: Using three specialist consultants, Alacrita reviewed the technical data and patents for each of the products, in addition to the projected development, timelines and financials. This, coupled with a face-to-face discussion with the company’s management team, allowed us to form a due diligence report covering the following key areas:
- Unique selling points
- Intellectual property
- Market size
- Commercialization strategy
VI. Due Diligence on a therapeutics company using a bioinformatics platform to repurpose clinical-stage drugs
Challenge: Our client, a VC firm based in Dubai, was planning to invest in a US-based therapeutics company and asked Alacrita to perform a technical DD. The target company was using a proprietary bioinformatics platform to identify clinical candidates for repurposing.
The VC firm asked Alacrita to focus on four assets in the companies pipeline, which were being developed across eight indications. We were asked to perform technical due diligence on each asset, analyzing both the current data in each repurposed indication as well as prior clinical data in previously studied indications..
- Clinical and preclinical data generated for each asset by the target company in the repurposed indications.
- Clinical development/licensing plans for each asset moving forward.
- Clinical data generated on each asset by other companies in previously studied indications. Our key question here was whether any previous failures in the clinic could impact future success.
- Regulatory opinions on each program as a result of discussions with the FDA.
- The market situation for each asset, including its competitive landscape and market opportunity in selected indications.
- The target company’s management team and its ability to position and develop each asset.
Our assessments and final conclusions were summarised in a PowerPoint slide deck; where we identified all key risks and labelled them by severity and impact. These were discussed with the target company.
As a result of our report, the VC firm decided not to invest in the target company.