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Fenwick & West's Third Annual San Francisco Bay Area Life Sciences Venture Capital Survey Reveals 50

March 28, 2007 (Mountain View and San Francisco, CA) - Fenwick & West, one of the nation's premier law firms providing comprehensive legal services to technology and life sciences clients, today announced the results of its Third Annual San Francisco Bay Area Life Science Venture Capital Survey.

The survey analyzed the valuations and terms of venture financings for 79 life science companies headquartered in the San Francisco Bay Area that reported raising capital during calendar year 2006.

"The results show a continuation of the positive trend in the life science venture environment," said Barry Kramer, partner in the firm and co-author of the survey.

"Up rounds outpaced down rounds 79% to 15%, with 6% flat, an improvement over 2005 where up rounds outpaced down rounds 65% to 21%, with 14% flat," said Kramer. "The results were also better than the results posted by non-life science companies in 2006, which were 67% up, 22% down and 11% flat."

An up round is one in which the price per share at which a company sells its stock has increased since its prior financing round. Conversely, a down round is one in which the price per share has declined since a company's prior financing round.

The Fenwick & West Life Science Barometer™—which measures the average price increase for life science companies receiving venture capital in 2006 compared to such companies' prior financing round—was up 50%.

"This is a very healthy increase," said Kramer. "It represents an improvement over the 43% increase for life science companies in 2005 and the 27% increase in 2004, although it's somewhat less than the 55% increase for non-life science companies in 2006."

"Non-life science company results," he said, "benefited from a larger number of companies with unusually high price increases, primarily in the Web 2.0 and related fields."

Michael Patrick, also a partner in the firm and survey co-author, pointed out that medical device valuations increased more on average than pharmaceutical valuations in 2006 – 55% vs. 41%.

"As reported by Dow Jones/VentureSource, venture capital investment in U.S. health care companies was up solidly in 2006 compared to 2005 – $8.2 billion vs. $7.4 billion," said Patrick. "Overall, health care's share of total U.S. venture investment increased slightly, from 31% in 2005, to 32% in 2006."

"Of note, U.S. medical device/equipment companies raised approximately $2.6 billion in 2006," he said, "the best year ever for that sector."

Complete survey results are posted on Fenwick & West's website at www.fenwick.com/vctrends.htm.

About the Survey

The Fenwick & West Annual Bay Area Life Science Venture Capital Survey, co-authored by law firm partners Barry J. Kramer and Michael J. Patrick, offers a unique view of the venture capital market in the San Francisco Bay Area by providing insight into the changes in venture capital valuations and terms. Focusing exclusively on trends in venture financing and valuations, the Fenwick & West Survey complements the economic data presented in the Dow Jones/VentureSource Survey and the MoneyTree™ Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.


About Fenwick & West

Established in 1972, Fenwick & West LLP is one of the nation's premier law firms with extensive expertise in venture capital, public offerings and other corporate finance, joint ventures, M&A and strategic relationships, intellectual property, litigation and dispute resolution, taxation, antitrust and employment and labor law.

Contacts:

Barry J. Kramer
Fenwick & West LLP
650.335.7278
bkramer@fenwick.com

Michael J. Patrick
Fenwick & West
LLP 650.335.7273
mpatrick@fenwick.com