In response to Kevin Kinsella's charge last month that Big Pharma was engaging in "predatory" business tactics to a degree unseen in the last five years, Sofinnova Partner's Antoine Papiernik says don't jump to that conclusion just yet.
In his view, Big Pharma, which has many of its own Big Problems, is merely taking advantage of a current state of affairs where VC funding for biotech is fairly weak. Papiernik sees this as a temporary situtation in an environment that ebbs and flows. The "predatory" deals come about for a variety of factors and many are not the "fault" of Big Pharma per se he says. These include:
- VC funds under extreme cash pressure and inclined to accept any deal offered
- Lack of competition in some deals which implies the biotech property for sale in that case isn't that valuable and doesn't command a big upfront
- Syndicates behind VC backed companies that are weak and the principals need to get out are inclined to take worse deals
Papiernik says that biotechs should be proud that they've shown the ability to innovate and discover new drugs. They've shown they are better at this with biologicals than Big Pharma R&D. In situations when there are multiple suitors for a biotech property, the upfronts are higher, the earnouts good and biotech is able to negotiate what it wants.
He believes the macro sector is in the favor of biotechs now, more than ever, For companies with value, good deals are there. And for those that can't show this? Well they will for now have to take less upfront and higher back ends until the funding options change -- just wait they will change.