West Coast Editor

How biotech can ride the trends in venture capital investing and benefit from big pharma's drying-up pipelines was a topic among many at the 15th annual Biotech Investing Conference in Menlo Park, Calif., presented by IBF Conferences and SRI International.

Incubators represent one of the ways pharma is approaching the pipeline problem, noted Ted Spack, co-chairman of the meeting and senior director of PharmaSTART as well as head of business development for SRI.

Also chairing the event was Cynthia Robbins-Roth, BioWorld Today Columnist and founder of BioVenture Consultants.

"One theme [of the conference] last year was mergers and acquisitions," Spack said, speaking after a panel entitled "Survival of the Fittest," which dealt with ways of getting access to creative approaches outside the companies' walls. "There have been a lot of buyouts, but those deals are getting increasingly expensive, and the pickings are getting smaller."

With incubators, pharma and larger biotech firms can "do a little home growing," Spack said. Late last month, Allozyne Inc. - launched two years ago by Seattle-based incubator Accelerator Corp. - took its own first steps after raising $30 million in a Series B round and appointing a new CEO. The firm modifies proteins with non-natural amino acids to create drugs. (See BioWorld Today, Oct. 29, 2007.)

Kate Murashige, law partner with Morrison & Foerster LLP, moderated the panel, which included speakers from Cambridge, Mass.-based Biogen Idec Inc. and from Pfizer Inc., of New York, the pharma firm rumored to be investigating Biogen as a takeover candidate. (See BioWorld Today, Oct. 16, 2007.)

"The guy from Biogen [Jeff Behrens] was looking more toward potential products pretty close to fruition," Murashige said, whereas Pfizer's Alex Polinsky, vice president and CEO of The Pfizer Incubator, "was willing to go to earlier stages."

And if Pfizer buys Biogen? "That question came up," Murashige said, but was quickly skimmed over.

Pfizer launched its incubator around the spring of this year on its La Jolla, Calif., research and development campus, and Biogen has the Biogen Idec Innovation Incubator, or Bi3, at its East Coast headquarters. (See BioWorld Today, March 19, 2007.)

Panel participants, who also included Maggie Flanagan LeFlore, head of London-based AstraZeneca plc's R&D Ventures, said they purely seek pipeline products, and do not consider exit strategies and quicker moneymaking ploys, like venture capitalists, Murashige told BioWorld Today.

"They were looking for small companies, spun off from university technology more often than not, and they would help them get some kind of semblance of a product, by bringing their own internal R&D," she said. "Then they would simply buy the company."

Another panel asked whether foundations might be the new early stage players, rather than VCs. Spack said the idea "seemed to be rather new to some people last year, but this year there's more acknowledgement." That session's lineup included Robert Beall, president and CEO of the Cystic Fibrosis Foundation.

VCs, Spack said, tend to favor the Phase IIa inflection point as the juncture at which they become involved. "The angels are still filling in the very early rounds," he said.

Overall, the IBF/SRI conference held "a little more optimism this year than I heard last year," Spack told BioWorld Today, adding that a "wider range of players are getting into this," and the meeting hosted more than 200 attendees.

"There's certainly talk about liquidity being pretty good, but [initial public offerings] are sounding tough," he said. "It's still a very risky game, but people are getting used to that risk, and finding ways to share it. I don't hear gloom and doom. I think there's a lot of realism, and looking for new models for moving forward efficiently."

The one-day conference ended Tuesday.