Merger Notes From the BIO Investor Forum

Notes from David Thomas who is out in San Francisco at the BIO Investor Forum,

  • Reverse mergers: It is difficult for a shell in this market climate to take on quality biotechs due to disagreements on valuation of the VCs vs. public company boards. Other issues with doing reverse mergers are disagreements with fitting the board with old shell vs new biotech board members. Public shells are looking for data driven catalysts that will move company valuation within two years.
  • Big Pharma: The climate today is better than ever before in terms of Big Pharma’s willingness and interest in acquiring early stage biotechs. Cash available and strategic position at Big Pharma suggests further opportunities. New players, in particular Japanese pharma companies, are entering the M&A space.
  • The tough public market climate, with no major biotech IPOs since October 2007, is shifting exit strategies toward acquisition. Furthermore, the data suggests that the return to VC investors on IPO exits is not always better than a return via acquisition. Investors are setting the deal price today, not the VCs.
  • Capital restraints: As companies and investors conserve cash and pull back on risk, the losers will be the drugs that never get a shot on goal. Lack of funding will result in narrowing the breadth of indications for compounds making it less likely for serendipitous findings. Many companies will cease to exist due to the inability to consolidate or raise new capital.
  • Suggestions for biotechs looking to be acquired: Stay focused on your internal expertise and not on external in-licensing or M&A. Selling off of assets to raise cash and return to your core focus is another option.

Productive Partnerships in Biomedical Translational Medicine

From one of my colleagues, Joseph Colangelo at the BIO Investor Forum,

“The university, financing and industry communities have gathered to discuss some of the core issues involved in developing and commercializing early stage technologies. Improving the relationship between the stakeholders in translational research can go a long way to helping each side understand the pressures and challenges facing all parties.

The financing community as well as patient advocacy groups are continuing to build relationships with universities and their professors to better understand the pathway from innovation to patients.

Universities are becoming more creative than ever in the commercialization process. Investment has been made in a variety of different areas including, infrastructure for technology incubators, pre-seed capital for product development, and emphasis on entrepreneurship have all led to the advancement of new technologies along the developmental pipeline.”

Thanks Joseph! See you when you get back to DC.

Epilepsy Facts From the BIO Investor Forum

  • Epilepsy is a neurological disorder characterized by hyper-synchronous electrical discharge in the brain. The disease affects approximately 1% of the U.S. population (3 million) with a slightly higher 1-2% worldwide incidence due to less consistent prenatal care. The incidence is also expected to increase in the U.S. due to the aging population.
  • The current epilepsy drug market is more than $14B world wide. However, 90% of the sales result from non-epilepsy CNS indications including chronic pain. One notable exception is Kepra with over $1B in epilepsy indication sales due to a superior safety profile.
  • It is estimated that approximately 36% of epilepsy patients are pharmaco-resistant and medically refractive to currently available therapies. New epilepsy drugs with novel mechanisms of actions are needed to treat this large and growing patient population. In addition, over 50% of patients discontinue or are not compliant with current therapies due to epilepsy drug side effects.
  • In addition, only approximately 150 sales reps are required to detail products to neurologists who specialize in epilepsy disorders, making seizure disorders a potential high margin attractive market for biopharmaceutical companies.

Capital Access 201 – BIO Investor Forum Kicks Off

Moments ago, panelists at the opening plenary painted a startlingly realistic picture of the industry, but emphasized that this is the time for companies to be more aggressive and strategic in how they target and approach potential investors and partners. Moderator Ben Perkins, PhD, initiated a lively discussion focused on how the realities of the economy will shape the future industry and how emerging biotechnology companies can best position themselves within the new landscape.

“Companies need to tell a crisp story, know their audience, and do their homework in order to get our attention,” said Andrew Busser, Principal of Symphony Capital. “Companies that are leaders in the field, have multiple products in the clinic, and whose products are critical to the company’s future will be particularly appealing to us.”

Tom King, President and CEO of Alexza Pharmaceuticals, emphasized that companies should assess the assets that they have – particularly cash on hand and R&D. There is a struggle with new technologies because they are new and the tendency to avoid risk is to ‘play to the past rather than to the future.’ He added that his company creates value everyday, but it doesn’t necessarily translate to share price.

Panelists

  • Andrew Busser, Principal, Syphony Capital
  • Luke Evnin, PhD, General Partner, MPM Capital
  • Thomas B. King, President and CEO, Alexza Pharmaceuticals
  • Oleg Nodelman, Portfolio Manager/Analyst, Biotechnology Value Fund, LP
  • Ben Perkins, PhD, Managing Director, Life Sciences Group, Pacific Growth Equities LLC

Success, Maybe, I think …

Communicating science can be tough. There are some pretty complex concepts, ideas, problems, and success stories to get across to the public, media, and politicians. I’m not talking about what a journalist or broadcaster has to do to get the message  across. I’m talking about people like me. PR folks (go ahead and call us flacks – I won’t be offended )  who have to cover a lot of ground without raising undue expectations, squashing hopes, raise that dreaded brand awareness, and yet still be interesting and informative. There has been lots of effort and words spilled in the fight to find the magic solution and we’ve all had some great successes and embarassing failures but there is another battle to be fought.

I’m at a meeting today with Communication Managers and Directors from Canada’s 7 Genome Centres and one of the items on the agenda was the inevitable ‘best practices’.  I shared our experiences with Facebook, Twitter, and blogs and I’m still not sure if they ‘got it’. Aarggh … failure to communicate with Communicators.

Which probably was a perfect example of what we all seemed to agree today was a common and consistent problem with some science communication efforts. As non-profits ( and I’m sure many academic and gov’t institutions are in the same boat ) we don’t have sales of equipment, products or drugs to track. Patents for the most part don’t rest with us so aren’t a true measure. Published papers? Maybe but not exactly a communication function and generally not reaching a general audience and the number of readers could be depressingly low.  Some of our work is pure science or basic research  and with project timelines measured in years updates can be few and far between. Not a lot of media releases to notch our belts with. Revenues about what you’d expect from a not-for-profit so let’s not go there.

All of the Genome Centres and many other organizations funded by the public have a strong outreach and education mandate however. You can count the number of people you touch with those efforts. Bums in seats, presentations given, people through the door of a public forum, science kits distributed. They’re all countable and suddenly by default we find a way to measure our success.  But it isn’t really a valid measurement is it ?

So time to start a new quest for measurement while continuing the science communications sojurn and I really want to know what others think. With some our partners including Alberta Ingenuity we’re even looking at forming a Science Communicators group of some sort that is focused on the quest for science PR and we’re open to ideas. Drop me a line and let me know what you think and help us out.

Or tell me you don’t quite get it …

40% More Investors Expected for BIF

Despite the market downturn, BIO is expecting a substantial increase in anticipated investor participation in the Seventh Annual BIO Investor Forum, taking place Oct. 29-31 in San Francisco, Calif. at the Palace Hotel.

More than 240 venture capital and public market investors are expected to attend – representing a 40 percent increase in participation compared to 2007.

A list of the companies of registered investors can be found at http://investorforum.bio.org/bif/2008/Investors.html.

Plenary and Business Panels to Address Growing Challenges of Small Biotech Companies at the BIO Investor Forum

Plenary sessions and roundtables will address how small biotech companies can continue to innovate and grow despite current market conditions.

The BIO Investor Forum’s plenary sessions and business roundtables will focus on economic and business issues facing the biotech industry, including M&A, capital access, exit strategies, technology transfer, and outsourcing among other topics. Featured plenary sessions and roundtables include:

Plenary Sessions
Capital Access 201 (Wednesday)
Experts will explore current funding options and how each approach may impact the investor’s standing in the short- and long-term.
Moderator – Howard Furst, MD, Partner, Deerfield Management
Panelists – Ben Perkins, managing director of Life Sciences Group, Pacific Growth Equities, LLC; Oleg Nodelman, portfolio manager at Biotechnology Value Fund, LP; Thomas King, president & CEO of Alexza Pharmaceuticals; Luke Evnin, PhD, managing director at MPM Capital; Andrew L. Busser, principal of Symphony Capital, LLC
The Return to a Thriving Marketplace – What’s It Going To Take (Friday)
Change of office, FDA reform, significant M&A, outrageously low valuations, a new investment model are all potential catalysts for change. This session will address how to offset investor concerns and reinvigorate public capital access and capital inflows into biotech again.

Moderator – George Milstein, head of investment banking of Pacific Growth Equities LLC
Panelists – Robert Rynd, director of Biotech Corporate Advisory Services, Thomson Reuters; Matthew Perry, portfolio manager at Biotechnology Value Fund, LP; David Singer, principal of Maverick Capital
Business Roundtables
Privately Thriving in the Bear Market – Insights into an emerging secondary marketplace for private investment in which management can hope to attract funding from diverse public and private sources.

One Exit Strategy Isn’t Enough – Late -stage private company executives will share strategies for exploring multiple exit scenarios simultaneously to potentially enhance returns.

Beyond Classic M&A – Exploration of most intriguing options to classic M&A, including traditional big pharma with biotech; private with private; public with private; reverse mergers; spin-outs and carve outs.

To access the entire program and registration, visit http://investorforum.bio.org. Registration is complimentary for qualified investors and credentialed members of the media.