By Michael Harris
NEW YORK ¿ Biotechnology financing may be difficult to find in the current economic turbulence, but it still is available to those with the carrot on a stick to entice investors: products in the pipeline.
That was the recurring theme at the 10th annual Innovative Drug Development Conference held Monday and Tuesday at the Plaza Hotel here, where more than 200 attendees representing early stage drug and biotechnology companies, as well as the investment community, met to discuss effective strategies for forging industry financing in the New Economy.
An opening-day panel discussion led by senior management officials from various investment firms offered hope for finding investors for attending firms, which were regarded as potential-laden companies with little previous industry exposure.
The panel seemed to concur that while investors may have tightened their purse strings, they had not tied them into a knot, meaning a drug with the potential to make it to market is nevertheless attractive in even a dismal economic climate. The panel estimated that between $37 billion and $50 billion was raised by biotechnology companies in 2000. Even though that figure may never be eclipsed ¿ certainly not in 2001 ¿ an estimated $12.5 billion could still be reached this year, which despite the chaos being experienced during the last seven months, would still render the second-highest total in biotechnology history.
Panel member Franklin Berger, senior biotechnology analyst and vice president, equity research for J.P. Morgan H&Q, said products could very well be the determining driver for defining the industry and, consequently, attracting funding and alliances. ¿New, promising products are what will spur venture capital interest, and smaller companies with limited assets can be expected to consolidate with hopes of surviving in order to push products to approval,¿ he said, adding that beyond 2001, the industry will be buoyed by drugs in clinical trials, especially the 220 or so currently in Phase III clinical trials.
¿Development milestones will translate into valuation increases during the next few years,¿ Berger said.
Other factors discussed during the conference, in addition to the 40 presentations from businesses with products in development, included the trend of big biotech companies with substantial war chests assuming the role of venture capitalists or pharma partners by investing in smaller companies; the impact of an information technology sector rebound or continued poor performance in the biotechnology sector; recent trends in pharma and biotech deal-making; and value-creation strategies for start-ups.
The conference was organized by Communitech Market Intelligence, which during its 10-year IDD Conference tenure has promoted and assisted more than 600 international start-up and early stage drug and biotechnology companies in achieving product approvals and stategic alliances.
Sharon Curry, president of Communitech, sees the conference as a boost for companies with something to offer.
¿These are not platform companies,¿ she said. ¿They are all businesses with therapeutic products definitely in development, representing a viable and valuable investment opportunity with much less risk associated with it than a mere idea,¿ she said.