SAN FRANCISCO – The once-predictable financing pathway for early stage biotech companies, from venture rounds to exit, is getting a creative makeover as players with more nuanced goals and strategies step into the fray.

With venture investors pouring $29.6 billion into mostly later-stage deals in 2013, angel investors rose to fill the gap, investing $22.9 billion into mostly early stage deals, according to Thomson Reuters senior deals analyst Vinay Singh.

"Angels investors and syndicates are only willing to allocate a limited amount of money per investment, and early stage investments fit the profile they're looking for," Singh said.

Corporate VCs, such as Amgen Ventures, MedImmune Ventures and Abbvie Biotech Ventures, not only have more money to spend, but also have the backing of their big pharma parents. Corporate VCs invested an average $8.9 million per deal in 91 deals during 2012, the most recent year for which full-year data was available, according to Singh's analysis of PwC Moneytree and National Venture Capital Association data.

"Coupled with the additional incentive of gaining a potential product for their parent company's portfolio, they find early stage investments a good fit for their objectives," he said.

But beyond those traditional players, Singh points to a relatively new category of investors, partnerships of big pharma and venture investors that fund early stage innovation with pre-defined exits. Pointing to Merck's partnership with Flagship Ventures, the tie-up between Johnson & Johnson, Glaxosmithkline plc and Index Ventures, and GSK's alliance with Avalon Ventures, he said alternative avenues for early stage finance are on the rise.

MAKE A BEELINE FOR THE MARKET?

Despite the burst of creativity in early stage financing, Chris Ehrlich, managing partner for Locust Walk Partners, suggested that increasing time to exits is making it difficult for venture investors to fund early stage deals, creating a backlog of companies in need of funding.

Oleg Nodelman, managing director of EcoR1 Capital LLC, proposed a solution to Allicense attendees: Go public. "To me, every biotech company board that isn't thinking about going public early and often is doing themselves a disservice," he said. "My favorite syndicate is the whole world."

Earlier, Nodelman suggested that if Calistoga Pharmaceuticals Inc. had not been sold to Gilead Sciences Inc., it'd be worth $2 billion today. Pondering that alternate path, Former Calistoga chief business officer Cliff Stocks (now CEO of Theraclone Sciences Inc.) told BioWorld Today that while it would be great to have Calistoga be public today, "in retrospect, the deal that we did was good for investors, good for management, good for patients and good for Gilead, and I have no regrets."

At least for now, successful IPOs may be hard to pull off, said Franklin Templeton portfolio manager and analyst Evan McCullough. "It used to be that we wanted to invest in first-in-class or best-in-class drugs," he said. "Now we want only-in-class."