Vector Fund Management's investment objective is to generate superior long-term capital appreciation through equity investments in later-stage private and public companies in the life sciences and healthcare industry. We emphasize later-stage investments in securities of companies that are raising capital in the private markets prior to the point at which they can access the public markets or execute an alternative exit strategy. We also participate in negotiated equity transactions involving securities of small to medium capitalization public companies in the life sciences and healthcare area.

The majority of our investments are negotiated directly with company management. Vector Fund Management is an active investor and generally leads or co-leads its investments. Members of Vector Fund Management or its associates generally serve on the Board of Directors of our portfolio companies. Our preferred investment size is between $5 - $15 million and our investment horizon is between one and three years.

Later-Stage Investments

Vector Fund Management's investment activities are directed toward companies that are beyond the initial start-up or early venture stage of development. We seek investment opportunities in companies managed by seasoned life sciences and healthcare industry professionals. Such companies have typically been funded as venture capital investments and have experienced significant development of their technology, products, and business strategy. Our focus is specifically on companies that are poised to move from development stage to commercially viable operating entities in a relatively short time. Later-stage companies are defined by their stage of product development, breadth of management team, and maturity of business strategy. Such companies often require only the round of financing in which we participate to reach a financial break-even point.

Vector Fund Management believes that the number of private and public companies in the emerging life sciences and healthcare universe that are in need of capital outstrips the financial capacity and due diligence capability of both the venture capital and public markets. Our investment thesis is that later-stage companies that are appropriately capitalized provide investment opportunities that are lower-risk and have a shorter time horizon to commercial success than do typical early-stage venture capital backed companies.

Life Sciences/Healthcare Focus

Vector Fund Management only invests in companies in the life sciences and healthcare industry. Our areas of investment activity include: biotechnology, pharmaceuticals, medical devices, diagnostics, plant and animal sciences, healthcare services, healthcare information technology, and consumer applications of emerging healthcare technologies. These emerging companies provide innovation to an industry that analysts estimate represent 15% of the domestic GNP growing to 20% by the year 2000. The life sciences industry is in a constant state of evolution, driven by new technological innovations, an ever-changing worldwide marketplace, and an increasing demand for less costly and more efficacious products and services.

While searching for the best companies in our industry, Vector Fund Management is acutely aware that the ensuing changes in the medical marketplace can systematically affect which companies are more likely to prosper over our investment horizon. We see the following trends acting as drivers for success:

Demand for Cost-Effective Products & Services Which Deliver Quality Care. The cost-containment revolution in the medical marketplace that began in the early 1990s continues, balanced by improved clinical outcomes.

Globalization. The overall economy in general, and the healthcare industry in particular, has become more global. This can be seen through the more centralized regulatory approval process in Europe for medical products, the emergence of the Pacific Rim as a critical new source of capital and customers for life sciences companies, the concept of worldwide strategic alliances as a mechanism to commercialize new products, and finally, an awareness of ever-growing international competition.