Tuesday, June 24, 2008
As is evident by the increase in coverage, there is an increasingly wide gap between academic research and starting a company in the press link.
The reasons for that are manyfold and include a decreasing number of investors willing to back very early-stage research, i.e. pre-protoype stage or even pre-proof of concept ventures. These investors are namely venture capitalists (and to a much lesser degree angel investors) who seek to minimize their risk to negative outcomes in feasibility studies or even clinical trials.
Consequently, the next generation biotech start-up - Biotech 2.0 if you will - has to have done a much more time and resource consuming development process to reach the "seed-worthy" level of proof-of-concept or phase 0. Preferred, however may now be even later stages such as a small phase 1, all with the goal of minimizing the risk of failure.
So far so good for investors in VC pools - but the money to develop the initial concept into a business has to come from somewhere. The NIH in it's current budget squeeze is not likely to be able to provide the millions of dollars needed across the research spectrum to bridge the gap.
Who then is willing, able and has a larger than usual amount of capital at hand: the pharma industry and big biotech. Yes they do usually acquire successful start-ups or small- to medium size biotechs (Sirtris-GSK) but I believe it is time to change the investment strategy and increase the development collaborations - especially with academic institutions, which would massively benefit from the process experience of pharma. Incidentally, that would also narrow the gap between academic results standards and industrial results standards.
It's a win-win situation and one that deserves consideration not only from the industry side, but also from the historically hesitant academic side.
6/27/2008
one of the problems that looms for investors is that there is no real understanding of how new therapeutics and devices will be covered under universal health care. also there is quite likely to be a Democratic sweep in November, and there is likely to be more regulation, and the specter of price controls. It is also very unclear about whether companies will be hit hard by increased taxes. all of these concerns affects company start ups and the willingness of investors to make it happen. pharma and biotech need to be very proactive in ensuring that policies and tax increases will not harm these endeavors.
7/2/2008
Wong gets it right. what we are worried about is government regulation that will fix prices. Between Obama and Clinton, the message is clear that
for profit biopharm companies are greedy and that they are preparing to take them on in the next administration. As a venture investor, that means that such investments are much less attractive than others that don't face such a threat. I am, in fact, a Democrat, but I am a realist and since I make my living in the venture capital space, it is essential to be realistic.
7/4/2008
All very good points.
Seeing as how the Universities that spin off research into nascent tech companies and states in which they pay taxes both reap significant benefits when such companies succeed, my suggestion is these entities should step up to help bridge the valley of death.
Recently Maryland's governor announced a $1.1B state initiative to support biotech. This includes equity investing in start up companies.
At my former university home, the UW, through the Wisconsin Alumni Research Foundation has a small pool of money for such purposes, but it is very well hidden and not well advertised. Other UW system insitutions have tech transfer funds, so I am told.
Steven Clark
http://stevensclark.typepad.com/bioscience_biz/
9/10/2008
The WSJ picked up the story of two successful (both scientifically as well as from a business side) scientists calling for closer collaboration between academia and pharma: http://blogs.wsj.com/health/2008/09/10/drugmakers-and-academia-should-collaborate-more-scientist-says/
NOTICE: As such, the comments on this blog were, are, and will always be solely the opinions of the individuals leaving them. In no way does Genetic Engineering & Biotechnology News, GEN Publishing, Inc., or Mary Ann Liebert ,Inc. endorse, condone, agree with, sponsor, etc. these comments.
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