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Developing Companies Showcase Their Technologies to Investors

By Peter Winter
BioWorld Insight Editor

What a difference a year makes. When biotechnology execs and investors converged on the Palace Hotel in San Francisco last year for the two-day annual BIO Investor Forum, the biotech sector had just come through a tough third quarter in terms of fundraising, with public and private financings for the industry down 48 percent compared to 2010. (See BioWorld Today, Oct. 12 and Oct. 25, 2011.)

This time around, the environment surrounding the 2012 event, which starts tomorrow, couldn't be more different. The sector posted a very strong third quarter performance driven by public biotech companies. (See the third quarter analysis on p. 1.)

Since the emphasis of the forum is on early and established private companies as well as emerging public companies, the agenda has a heavy dose of business roundtables focused on early stage and creative financing and partnering strategies. This intelligence will certainly be welcomed by biotech execs who continue on the long trail of the often elusive investment dollar.

One session for example, will examine the new pharma-VC model for biotech investing via funding collaborations between pharmaceutical companies and traditional venture capital funds. These groups are pooling their resources and expertise in an attempt to source and develop the most successful drugs.

Raising capital continues to be a challenge for early stage emerging biotech companies, Alan Eisenberg, executive vice president of emerging companies and business development at the Biotechnology Industry Organization (BIO) told BioWorld Insight. "Faced with these issues, companies must actively seek business development and partnering opportunities in addition to venture capital financing. The IPO window also remains tough and selective, with companies not able to raise the amount they initially file for. Also the macro-economic picture has made it difficult for a strong IPO window to develop."

Regulatory uncertainty is another factor having a major negative impact on the private funding of biomedical innovation, deteriorating the ability of BIO's member companies to deliver cures and new medicines, Eisenberg added.

Despite the difficulties of getting innovation off the ground and funded, BIO points to some important positive developments for biotech companies so far this year:

The recently passed JOBS Act creates an "on-ramp" to the public market for emerging growth companies, allowing them five years to focus on conducting critical research that can lead to cures for debilitating diseases before having to divert funds to costly regulations.

The Food and Drug Administration Safety and Innovation Act included the permanent reauthorization of the Best Pharmaceuticals for Children Act and Pediatric Research Equity Act, which will encourage continued investment in pediatric research and help ensure that new drugs and biologics can be used safely and appropriately in pediatric patients.

In addition, Sens. Robert Menendez (D-NJ) and Olympia Snowe (R-ME) and Reps. Jim Gerlach (R-PA) and Richard Neal (D-MA) recently introduced the High Technology Small Business Research Incentives Act (H.R. 6559/S. 3595) to stimulate capital formation for small biotech companies. This legislation will help to set the stage for tax reform in 2013. "While we have seen some positive momentum, we continue to be cautiously optimistic," concluded Eisenberg.

There will be more than 110 presenting companies at this year's event, including 34 "Discovery Companies" defined as pre-emerging private companies, in the Seed or Series A financing round with under $25 million raised.