1
Managing a Startup in Turbulent TimesSatellite
Broadcast

• Presented by Fred A. Middleton
• General Partner Sanderling Ventures
• June 6, 2001

2

• Sanderling Ventures - An Introduction
• The Biomedical Sector - An Overview
• Startups in Turbulent Times - Important Issues

3
Sanderling Overview
Sanderling Ventures - Overview

• Founded 1979
• Strategy Seed and Early Stage Biomedical
  Investing
• Main Office Sand Hill Road, Menlo Park, CA
• Total Funds Raised Sanderling I thru V 468
  Million
• Companies Funded 50
• IPOs Completed 16
• Geography 75 of deals in Western U.S.
• Employees 14 with 3 Ph.D.s on staff

4
Sanderling Overview
Biomedical Investing An Overview
Capital Requirements
Intellectual Property
Markets Served
Time Horizon
Margins
Big
High
High
High
Long
Biotechnology
High
High
Medium
Medium
Medium
Devices
Huge
Short
Modest
Low
Low
Healthcare Services Delivery
5
Sanderling Overview
Biomedical Technologies and Markets
Composition of Deal Flows
Healthcare Delivery Information Services
Sanderling V Investment Strategy
Others
Healthcare Delivery
15
Medical Devices and Instrumentation
35
Biotechnology Therapeutics
Medical Devices Instrumentation
Biotech and Therapeutics
50
6
Biomedical Sector Overview
Private Equity Funds Flowing to the Medical
Sector Have Lagged that for IT
Actual Funds Flow ( Billion)
60
50
40
30
20
10
-
1994
1995
1996
1997
1998
1999
2000
Internet
IT Only
All Biomedical
Note IT Sector defined as Telecommunications,
Semiconductors, Comp. Hardware Software
Source NVCA/Venture Economics
7
Biomedical Sector Overview
The Percent of VC Dollars Flowing Into Biomedical
is Below its Historic Average
Biomedical As A Of Total VC Disbursements
30
25
Historical Average (22 years) 17
20
15
10
5
0
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
Note 1999 and 2000 represented 7 and 5
respectively
Source NVCA/Venture Economics
8
More Biotechnology Products Approvals
Biomedical Sector Overview
Number of Products
136
100
83
62
46
33
24
Source US Food and Drug Administration
9
Biomedical Sector Overview
Year 2000 Brings a Window of Opportunities for
IPOs
Source BioCentury, BioWorld Financial Watch
10
Biomedical Sector Overview
Progress Recognized The Growth of Public
Bio-Tech Companies Valued at Over 1Billion
Source Sanderling Analysis
11
Building Successful Startups
Market Valuations Relative to Stage of Clinical
Development
Company Valuation ( Millions)
Source Sanderling Analysis
12
Building Successful Startups
Average Valuations of Biomedical IPO Candidates
IPO Market Cycle Average IPO
Valuations

• 1990 1994 105 million
• 2000 Today 300 million

Source Sanderling Analysis
13
Startups in Turbulent Times Important Issues
Managing Startups in Turbulent Times
Five Questions to Ask of Your Company
1. How has my business environment changed?
2. Is my long term strategy still valid?
3. What is the current funding outlook?
4. Is my companys current burn-rate sustainable?
5. What changes in operating tactics are
appropriate?