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Novo Annual Review 2016
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large
investments
since 2013, more of novo a/s? investments have been directed towards well-established, cash-flow positive companies
. these investments are made in publicly listed as well as privately owned companies with a mix of minority and majority positions. large investments made two major investments in 2016
? both as minority stakes with private equity firms as the controlling shareholder. the first investment was made in eresearch technology inc. (ert), in which novo a/s acquired a 30% stake with nordic capital as the controlling shareholder. ert is incorporated in the us and offers software-enabled solutions for the collection of clinical data. the second investment was made in german-based synlab, the european market leader in clinical laboratory services. novo a/s initially acquired a minority equity stake of over 10% in synlab and, since the initial acquisition, we have increased our holding in the company. the majority owner is the british private equity firm, cinven, with whom our large investment unit has a close working relationship. in 2016, unrealised and realised returns for large investments were negative, primarily due to the unfavourable development in the share prices of chr. hansen holding a/s and ophthotech corp. in december, ophthotech announced that fovista ® did not achieve the primary endpoint in its pivotal phase 3 study. as a consequence, the result for 2016 for large investments was negatively impacted. it should be noted, however, that while the share price of ophthotech dropped significantly in 2016, the overall investments into ophtotech have delivered a positive, albeit small return. by the end of 2016, our large investments portfolio comprised 10 companies of which eight are located in europe and two in the us. the portfolio consists of majority positions in sonion and xellia, both headquartered in denmark, and minority positions in chr. hansen, symphogen, synlab, orexo, veloxis, btg (all european) and ert and inogen (both in the us). following an extensive strategic review in 2016, we intend to continue to allocate significant funds to large investments in the years to come. venture investments in 2016, novo a/s continued with its high level of activity in life science venture capital investing, thus consolidating its position as a world-leading venture investor. novo a/s added four public and 10 private companies to its venture portfolio; the companies are all located in the us except for two that are located in the uk. novo a/s was a lead or co-lead investor in eight companies that went public in 2016. of the dkk 2.1 billion invested by novo ventures in 2016, dkk 1.8 billion was invested in the us and dkk 0.3 billion in europe ? dkk 1.2 billion in new companies and dkk 0.9 billion as follow-on investments in existing portfolio companies. in 2016, six of our portfolio companies were sold, eight were publicly listed. exit proceeds totalled dkk 0.8 billion. at the end of the year, the total book value of our venture investments was dkk 5.9 billion, and the venture portfolio consisted of 52 companies, of which 39 are located in the us. the share of listed companies increased from 56% in 2015 to 64% in 2016 as a result of initial public offerings of a number of portfolio companies and new investments in listed companies. it is the intention of novo a/s to continue to increase the allocation of resources towards the private and public us venture market in the coming years. seed investments novo a/s runs a seed investment programme that supports early-stage life science companies, primarily in the nordics. in addition, novo a/s assists the novo nordisk foundation in a pre-seed programme that aims to identify and support academic research with commercial potential. this programme provides managerial and strategic support to early-stage projects, and funding is given as grants in the same manner as other grants awarded by the novo nordisk foundation. novo a/s has made a strategic decision to contribute to the strengthening of the nordic biotech environment. we will continue to build on the success of our seed investment portfolio and make the most of the opportunities generated by the pre- seed programme, not only in the nordic countries but also in the rest of europe. in this way, we hope to attract international investors to the nordic life-science sector. life science investments value by year end dkk billion 2016 2015 large investments 31.5 27.8 venture investments 5.9 3.9 seeds investments 0.3 0.3 total life science investments 37.7 31.9 large investments dkk billion 2016 2015 value at the end of the year 31.5 27.8 investments during the year 6.5 1.2 cash proceeds during the year 0.7 2.1 unrealised and realised gains/losses during the year -2.1 6.6 venture investments dkk billion 2016 2015 value at the end of the year 5.9 3.9 investments during the year 2.1 1.7 cash proceeds during the year 0.8 3.6 unrealised and realised gains/losses during the year 0.7 1.9 13 management report
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