VANCOUVER, British Columbia - As it prepares to welcome the world for the 2010 Winter Olympics - set to start exactly one year from Thursday - the city, for the seventh year in a row, hosted a smaller group of local and international visitors as the annual BioPartnering North America conference, which opened Monday.
The two-day meeting kicked off with some promising news for the region, as Pfizer Canada upped its commitment by an additional $2 million to assist drug research and development in British Columbia.
That, plus the higher-than-expected conference attendance - Robert Kilpatrick, of Technology Vision Partners reported that 1,068 people were expected by the meeting's end, up from the 933 that attended last year - almost made it possible to forget that the world is in the midst of an economic crisis, at least for a few minutes.
But as the first panel took the stage Monday morning to discuss the state of deal-making in the biotech industry, the harsh reality again settled in, as experts continued to predict tough times ahead.
"I don't see this as a short-term anomaly," Mervyn J. Turner, chief strategy officer and senior vice president of worldwide licensing and external research at Whitehouse Station, N.J.-based Merck & Co. Inc., said of the current capital market environment.
Especially if 2008 is any indication. Last year witnessed a "dramatic reduction in financing," reported panel moderator, James Watson, managing director and head of merchant banking at Burrill & Co.
And he expects money to get tighter as venture funds become more limited while VCs struggle to maintain their existing portfolios.
Even partnering might get harder, as deal sizes fall with valuations. M&A activity, meanwhile, could be hampered by the financing market, as well, Watson said. "Buyers could be stepping back," especially if a deal requires financing to close.
So companies looking to weather the economic storm would be served best by keeping their options open, a strategy that helped Cambridge, Mass.-based Archemix Corp. stay afloat despite some thwarted business developments in 2008.
Archemix, a privately held firm that develops drugs based on its aptamer technology platform, had hoped to go public in 2007.
But the lackluster capital markets prompted the company to yank its S-1 filing last year. Then, in November, it signed what looked like a promising reverse merger agreement with cash shell Lexington, Mass.-based NitroMed Inc., a deal that would have given Archemix access to about $44 million in cash, but NitroMed shareholders balked and the firm later signed a deal with one of its shareholders, Deerfield Capital Management. (See BioWorld Today, Nov. 20, 2008.)
Fortunately, for Archemix, the reverse merger was only "one of several options," said Duncan Higgons, executive vice president of business operations, who stressed "you can't rely on just one."
Archemix walked in to the NitroMed deal "with our eyes wide open," he said, adding that the company's board met in December to discuss contingency plans should the reverse merger fall through.
And since combining with NitroMed was seen as a "pure and simple financing" for Archemix, Higgons said, the firm also was looking at other strategies for adding to its cash runway.
The company then hit the jackpot in late December, picking up $27.5 million in up-front payments in a potential $1.4 billion deal with London-based GlaxoSmithKline plc to develop aptamer therapeutics against inflammatory disease targets. (See BioWorld Today, Dec. 24, 2008.)
"For us, it's all about the [cash] runway," Higgons said, adding that the firm has secured more than $100 million in money from its partnering activities, and funds from partnering deals has carried the company in recent years.
Archemix's last private venture round was in 2004, when it pulled in $50 million in a Series B.
Redwood City, Calif.-based OncoMed Pharmaceuticals Inc. had more luck than most last year, also by employing combination financing and business development strategies.
The firm closed the final $93 million tranche of a total $154 million Series B financing in November to support work on its cancer stem cell antibody programs.
But OncoMed President and CEO Paul Hastings said that success was due in part to a significant boost from new partner GSK, which formed a potential $1.4 billion discovery, development and commercialization alliance with OncoMed late last year to develop products against multiple cancer stem cell targets. (See BioWorld Today, Dec. 11, 2007.)
Between the financings and the GSK deal, OncoMed was able to secure about $230 million in funding, Hastings said, which should give the firm enough cash to sustain operations until 2012, hopefully long enough for the current recession to end.
"I hope it's over by then," he said, "because if it's not, we're all in real trouble."