ATLANTA - On Wednesday, attendees of the Georgia Life Sciences Summit here escaped from the early fall heat into the air-conditioned rooms of the Georgia World Congress Center.

As part of the conference, Rom Papadopoulos, a managing partner with The Intuitus Group LLC, moderated a focus session on what he called his company's "favorite topic" - money, more or less. The panel, Financing the Life Sciences Industry, consisted of Jessica Chutter, a managing director with Morgan Stanley & Co. Inc.; Mark Colonnese, executive vice president of commercial operations and chief financial officer of Alpharetta, Ga.-based AtheroGenics Inc.; Bruce Robertson, a managing director with H.I.G. Ventures; and Ryan Schwarz, a managing director with The Carlyle Group.

Papadopoulos opened the session by discussing the "good news and bad news" regarding financing life science companies. In the third quarter, VC funds have "raised an extraordinary amount of money," he said, which points to eager investors. During the second quarter, there were 856 deals and $6.3 billion invested. First-year financings "reached a five-year high," he said. But here's the bad news: The public markets are "hibernating" and many VCs, that have been through several rounds of financing, now are asking, "Where's the exit?"

But is a public market exit desirable at all? Chutter said there are advantages to remaining private. Privately held companies have "a lot more flexibility on the deal side," she said, citing the opportunities for milestones and "carve-outs" like Biogen Idec Inc.'s May buyout of Conforma Therapeutics Corp., which allowed for a Conforma product to be spun out into the startup Cabrellis Pharmaceuticals Corp. (See BioWorld Today, May 4, 2006.)

Robertson said today's M&A exits are "dramatically superior" to IPOs. The average capital raised before an exit is $58 million, and the average exit value for an IPO is $190 million, he said, but the average exit by acquisition of $280 million. M&As also are attractive because a company doesn't need to build the "big infrastructure" required for an IPO. When Robertson considers investing in a firm, he doesn't eye the public market, but rather looks for likely buyers.

It's not easy to attract investors, and it can be "pretty much a full-time job to raise the money you need," said Colonnese, suggesting companies get "a good front man" who can explain the science and product comfortably.

"What you can't skimp on," Papadopoulos added, "is getting your message out well."

Robertson shared reasons why H.I.G. Ventures, which usually invests in "late early stage" financings rather than seed rounds, led a $3.6 million Series A round for Atlanta-based Metastatix Inc. last month. He cited three main reasons for investing: the team, the target and the drug. Plus, Metastatix co-founder Dennis Liotta has an "identified track record of forming drugs that become commercial," Robertson said. (See BioWorld Today, Sept. 8, 2006.)

Although Robertson said H.I.G. describes itself as 10x investors, Schwarz said that "return expectations" for investors "have come down."

There have been more hedge funds placing money into the sector, and Chutter hopes that will allow "companies to remain private for longer" and receive a higher valuation if and when they do go public.

Georgia is the seventh-largest state in terms of biotech, but Atlanta is not a biotech hub, so while it's possible for a company located here to raise funds, "you have to be proactive," Chutter said. "There has to be significant outreach."

Robertson agreed. "Good money will come to good investments opportunities."

The summit ended Wednesday.

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