“As a strategic investor, we don’t invest in things unless we see a path for them to be acquired by Abbott. We do, however, look to invest in more white space opportunities – areas in which we don’t have existing business. But it still has to meet those same criteria where there is a business case to be made that Abbott could be the acquirer”.
There is a different approach to corporate venturing today. The prior model, as it related to corporate venture groups, saw the venture community keeping the private companies at an arm’s length distance away from the corporations in order to build them, create value and, hopefully, have an auction at the end. At that point, you’d get around to the strategics. Or, you’d build the private companies and get to an evaluation point where you’d want to protect the price-per-share value of the company. So then, you would approach the strategics to get a more favorable price for your financing round.
Due to the lack of early stage venture capital specifically in the healthcare sector, corporate investors are no longer at the tail end of the process. A new model has emerged where corporate venture groups and certainly Abbott is taking a much more aggressive approach in partnering earlier with companies, especially in areas of high strategic interest, such as ophthalmology.
Norton sees other differences for innovators in approaching the two types of investor groups – as well as advantages in partnering with corporate venture groups.
“If you are in an ophthalmic entrepreneurial endeavor, we may be willing to finance the company from an early stage, thus eliminating a lot of risk, such as financing and syndicate risks associated with the venture community”.
Norton regards another distinct aspect of being a corporate investor to be that they are less price-sensitive than their traditional counterparts.
“We obviously don’t want to pay more than something is worth, but because we are strategically driven and not financially driven, it’s not always our key incentive. So from a dilution perspective, there’s probably the potential for having less dilution from raising money from a corporate investor versus a pure play VC”.
Other major benefits for innovators to consider are 1) the market validation that comes from having a corporate investor and 2) the resources that are made available to the companies in which they invest. He also said the availability of the corporate entity’s expertise and experience is valuable for consultative services on decisions the innovator makes.
Norton identifies front and back of the eye as foremost areas of interest and opportunity in ophthalmology.
“Regarding front of the eye, there are technology and channel opportunities. An area getting a lot of buzz is (MIGS) minimally invasive glaucoma surgery. Although a lot of those companies have a long way to go until they get to market, I believe this is an area that will continue to secure investment – especially as the regulatory and reimbursement paths are defined, you’ll see more fast-follower technologies in that space, if they can circumvent the existing intellectual property,” he said.
Norton expects the trend of investor interest in the area of premium cataracts to continue, as surgeons are making a channel trend effort toward offering automated treatments for patients to consider along with the traditional manual cataract procedures. He foresees a trend shift by patients toward the premium options that leverage better technologies that automate some of the things that are done manually in that disease state today.
“It’s also important for the major device manufacturers because it’s a path to some of the higher end products, which are the femto emulsification machines and the implantable lenses, which will definitely constitute a noticeable portion of revenue for manufacturers.
He cited the impetus behind Abbott’s recent acquisition of Optimedica Corp. as confidence grows in Optimedica’s femtosecond laser technology which helps to replace the natural crystalline lens in the eye as an example of technologies that will influence the future of relative treatment decisions.
Regarding back of the eye diseases, Norton said drug delivery and age-related macular degeneration are two other areas of venture interest moving forward.