Early Stage Snarl-Up

The research capabilities of big pharma – with their lay-offs and site closures – are shrinking and it has been presumed that they will pick up by acquisition of smaller companies (or perhaps just buying the licenses) who have done the early stage work in drug discovery and need that extra help to get through clinical trials and to the market. It sounds good in theory perhaps. But a few notes came across my desk (or rather my desktop) that paint a rather bleak picture for the future of start-up biotechs.

First pair of articles came from the CED Biotech/Life Science Conference which was held in Raleigh, NC (which is part of why I heard about it – RTI had a presentation at it). One was from the former CEO of MedImmune, David Mott, who talked about his time there. He commented that they had four setbacks in clinical trials but got there in the end (their lead product has more than $1 billion in sales). Then he added that you cannot get such leeway these day (“you’ll probably get two shots”). Start-ups need to be thinking about their product – and how much they can make and charge for it – very much earlier in the cycle than previously and should look to make early decisions on their pipeline to afford expensive failures that could ruin the company.

But another story from the same conference talked about the investment to get a company going in its early stages. There is a funding gap, with investors looking for a much clearer picture of where their return is coming from. Or they are not helping out early stage companies but looking at more developed pharmaceuticals or indeed at completely different areas – medical devices for example. So there is a paucity of funding from venture capital, some can be made up through grants, but it is hard to get enough funding that way, especially for a very small company that is mostly outsourcing the benchwork.

Well, perhaps big companies can provide some of that start-up capital? Not big pharma though. As we see on In the Pipeline, big pharma is aggressive in its dealings with biotechs, cutting deals that are very much in their favor and now have a lot of the former Wall Street advisers helping them make those deals tougher.

How are we getting the basic research done to make new drug discoveries again?


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