The Big Red Biotech Blog

VC Deals - especially Life Science - Have BAD 1st Quarter

New reports from PricewaterhouseCooper (MoneyTree Report) and National Venture Capital Association (Reuters data) show that VC investment in Qtr 1 2013 dropped 12% by dollars and 15% by number of deals as compared to Qtr 4 2012.  In a Qtr over Qtr comparison with Q1 2012, the amount of dollars invested this Qtr was down 6%. 

VC funding was therefore $5.9 B for 863 deals in Qtr1 vs $6.7 B for 1013 deals in Qtr4.  Life Science specific investment fared even worse - with $875 M for 96 deals versus $1.3 B for 138 deals in Qtr 4.  That represented a 33% drop in dollars and 30% drop in deals. Even worse, first-time deals dropped 52% and garnered only $98 M dollars for 20 companies, the worst performance since Qtr 3 1996 and Qtr 2 1995 respectively. See Fierce Biotech.

If there is a silver lining (and maybe there is), some speculation exists as to whether more companies are preparing for IPOs, as 175 IPO filings have been submitted to the SEC for review. This is discussed extensively in Xconomy. 

Posted by Bruce Lehr Apr 19th 2013.

April Fool - No Patent for Gleevec in India

Fierce Biotech also reports today that the Indian Supreme Court rejected Novartis' bid for a patent on its cancer drug Gleevec.  The court said the extended release form of Gleevec, which has never had an Indian patent, failed to meet a hurdle as a new subsance with increased efficacy. Effectively they ruled this represented an instance of "evergreening" by Novartis and rejected its application under section 3(d) of Indian Patent code.

Consumer advocates and biosimilar producers hailed the ruling as a victory to make this drug more available to the Indian populace.  Novartis said it the ruling provided heavy disincentives for it to invest in any more R&D work in India and implied it would think twice before marketing anything in India without patent protection secure in hand.

If this became a more generalized phenomenon experienced by other multi-national companies in India, will they as a group choose not to market some of their newer products there?  If so, does that mean India will be increasingly relegated to using older (and cheaper) versions of drugs that have had their IP expire effectively.  I'm not sure.  One could argue this would have a long term negative effect on what is offered for sale in India.  On the other hand, people can't use a drug they can't afford to buy in the first place, now can they?  This will be worth watching.

In the Fierce Biotech piece, it was also noted that the UK had passed some new tax provisions that will favor R&D investment in the UK -- effectively reducing tax rates on profits from patented products.  There is also an above the line tax credit of 10%.  The new provisions called the Patent Box were hailed by the BioIndustry Association (BIA) as being a new spur for R&D investment in the UK -- instead of a place like say India.

Investment may well swing back toward the UK, at India's expense for example.  But something like this to me is less likely to sway India R&D investment decisions, than the aforementioned patent ruling -- which in itself is less likely to effect R&D investment I think than it is to affect decisions on what products to actually introduce and market in India. That's just me.

Posted by Bruce Lehr Apr 1st 2013.

 

 

Quote Of The… Year? $1B Drug Cost Is ‘A Myth’

Andrew Witty, CEO of GSK has let the Cat out of the Bag.  He says oft-cited $1B figure is inflated as it includes costs of all failed drugs. 

Quote Of The… Year? $1B Drug Cost Is ‘A Myth’ // Pharmalot.

He reasons if Big Pharma (and others) didn't fail so often and weren't so inefficient, then costs would drop.  And that coul dbe passed on to the consumer. That's the first time I've seen that kind of statement out of a leading Big Pharma Exec's mouth.  He should know better than I.

It might appear Witty is trying to appeal to EU government cost cutters by holding out strong hope that drug costs can be contained, in part, through more efficient development leading to lower prices to consumers and payers.  Not likely to win many friends in rest of Big Pharma or at Tufts.

See also In the Pipeline.

Posted by Bruce Lehr Mar 18th 2013.

India and China Start Ups?

Here's a post from In the Pipeline discssing latest information on status of VC investment in biopharm R&D with start ups in India and China.  Conclusion?  VC activity is still fairly low by comparison to US standards.  The study author's estimate was that approximately $1.7 B had been invested in 116 firms over the past 12-13 years.  By comparison, the US industry would expect about that much investment activity per quarter. 

No where to go but up -- and that does appear to be the direction in which things are moving -- albeit slower perhaps than one might imagine.

Posted by Bruce Lehr Mar 8th 2013. 

EC Funds up to 200 New Rare Disease Drugs

Fierce Biotech reports this afternoon that the European commission has pledged $187M in new research funds aimed at helping develop up to 200 new drugs for rare diseases by the year 2020.  Rare diseases have become a popular target these days for drug makers so the uptake of the R&D in these projects should be good. Part of the popularity with developers is that these drugs can take a more streamlined path in clinical trials and with regulatory approval.  Another popular feature is that these drugs often command among the highest prices per patient in the biotech world.   

It's ironic that the previous post talks about Express Scripts latest analysis of drug prices. The so-called Specialty category experienced an 18%+ growth rate last year and that is expected to continue. Drugs to combat rare diseases typcially fall squarely in this category as well.  So these drugs while provided needed therapies for the afflicted will tend to further exacerbate the financial and issues that 3rd party payers and governments are grappling with. 

It's further ironic to me that many of the groups that advocate for the development of more rare disease drugs -- which have been historically neglected -- tend to also be the first groups that raise objections to ultra-high prices these drugs often command. Therein lies the rub.

Posted by Bruce Lehr Mar 5th 2013.

Luke Takes Umbrage to LaSalle Biotech Hub Rankings

Here's a good article from Xconomy's BioBeat today.  In it, Luke Timmerman calls to task a recent report from Jones Lang LaSalle purportedly ranking the top biotech hubs in America and the World.  Luke argues persuasively they got it wrong and calls for someone to provide a "real analysis" and produce a better set of rankings.

I think most of his points have merit.  Read the blog post yourself and decide. I do think a careful consideration of most, if not all, of his 15 points would provide a more holistic ranking and one that would be more robust in its conclusions.

Posted by Bruce Lehr Mar 4th 2013.

Life Sci VC Reviews 2013 Deals

Here's some interesting commentary and facts about some of the early biotech structured deals in 2013 between Pharma and the small pre-clin stage biotechs.  The post is from Bruce Booth of Life Sci VC.

The upshot is that the deals look good so far.   All appear to be high science plays (two orphans), share risk and capability between partners, are capital efficient, were driven by interest in the program and have low asset bases, and could all return outsized downstream returns (albeit low probability for full pay-outs). 

The upfront return (IRR) on only one deal is particularly attractive. Questions now arise as to whether there will be more movement toward pre-clin type deals.  If so, will this shorten or lengthen the time to liquidity for drug discovery companies once the big pharma bureacracy takes over?

Posted by Bruce Lehr Mar 1st 2013.

Ooooh! This isn't Good for US Manufacturing Economy

Here's a sobering report from Xconomy on a new study out of MIT.  In it, MIT researchers claim that US manufacturers (150 in study from diverse industries) hit problems when they go to scale operations at full commercial level.  This leads them to seek foreign investors and set up foreign facilities. Wave bye-bye to some good jobs.

That's not good and is why there is beginning to be more clamoring for manufacturing supports in the US (i.e. tax credits and the like).  It would be nice to have the manufacturing base remain strong (US is still No. 1) bu there is a trend toward moving to Asia and other sites abroad. We need to nip it.

Posted by Bruce Lehr Feb 28th 2013.

 

 

Report on 2012 Biotech M&A

The LifeSci blog reported this morning on some key statistics and trends in Biotech M&A in 2012.  Not surprisingly, some data were good, some bad and some ugly (according to LifeSci).  Here's the summary:

• Median investor multiples in the US have risen from 1.2x in 2005, to 2.5x in 2011 to a nice 3.5x in 2012.  Going my way?
• Unfortunately, this is NOT the case in Europe where the comparable 2012 figure was only 1.3x
• The ugly trend is that the time from founding the company to trade sale is lengthening -- from about 5 years in 2005 to more than 9 years in 2012.  Looks similar to trend line for FDA approvals on new drugs.  Coincidence?

Posted by Bruce Lehr Jan 30th 2013.

New Global Academic Alliance To Speed Drug Discovery

Six leading institutions have formed an alliance designed to accelerate the translation of academic research into usable medicines and therapies.  The six include:

• The Centre for Drug Research and Development (CDRD), Canada
• Lead Discovery Centre (LDC), Germany
• The Scripps Research Institute, Scripps Florida, United States
• The Centre for Drug Design and Discovery (CD3), KU Leuven R&D, Belgium
• Medical Research Council (MRC) Technology, United Kingdom
• Cancer Research Technology (CRT), United Kingdom

PharmTech Talk » New Global Alliance Aims To Speed Up Academic Drug Discovery.

The six organizations plan to facilitate international cooperation, develop standards and performance measurements, share best practices, expertise and resources, and collaborate on drug development projects.  Ultimately , they will work together to improve the conversion of global early-stage research into much-needed new therapies. Currently, they have a portfolio of more than 165 innovative therapeutic projects targeting significant unmet medical needs. 

This is yet another shot at improving translational activities.  Lack of good translation seems to be a popular whipping boy as to one major element that plaques the current pharma model. We'll have to see if efforts by this group or others like NIH really have a winning effect. 

Can a Young Biotech Go Long?

YES! That's the answer given by Katrine Bosley, former CEO of Avila Therapeutics, in a piece in today's Xconomy.

I liked her whole perspective in the piece.  She argues that if a company's management focuses on creating value -- then they will have the chance to grow into a fully integrated pharmaceutical company (FIPCO) or they may also be offered opportunities for other types of deals including being acquired.  The key is to focus on the value creation first -- so you will have something tangible to consider in making a 'go long" or M&A decision. 

If you do create value, you could have the chance to become an Ironwood, Aveo, Regeneron, or Onyx Pharmaceuticals. Or you coudl get a good purchase offer from a big pharma partner that is a good fit like those realized by Plexxikon, Adnexus, Avila, Intellikine, or Calistoga. 

Either way you can be successful in bringing new medicines to market and pleasing your investors.

Posted by Bruce Lehr Dec 20th

 

Report Card on Late Stage Drug Development in Big Pharma

Deloitte and Thomson Reuters generated data on the late stage drug programs of the top 12 Big Pharma companies. The good news - more drugs were approved in 2011-12 (41) versus 2010-11 (32).  The bad news - forecasted revenues 2011-12 cohort ($211 B) versus 2010-11 ($309 B) -- an almost 32% drop. The latter translated into a 7.2% R&D return. The average cost of development was pegged at $1.1 B (see previous post where that figure was reported as $1.9 B). The D-TR Report further notes that 22 late stage drugs died in 2011-12 as compared to 19 the prior year.  This wiped away $73 B and $77 B of potential value respectively in those two years.

Deloitte's head analyst, Julian Remnant, noted that half of the top 12 companies experienced a decline in net value realized from product commercialization last year. This is exacerbated as goverments and third party payers exert downward pressure on prices -- or make it more difficult to get reimbursement without clear product benefits over existing competition. They suggest companies battle this challenge through better clinical trial design aimed at targeted patient populations to establish the clear comparative benefit.

In other words, companies need to show payers why they should buy the new drug by demonstrating enhanced clinical benefit to patients and or superior cost effectiveness in use.  As Mona Lisa Vito might say, "Oh my God.  What a f**king nightmare!"  See Fierce Biotech.

Posted by Bruce Lehr Dec 5th 2012.

 

 

 

 

 

Economists Agree - Drug Development Costs a Sh*tl**d!

Fierce Biotech reports this morning that the Office of Health Economics (UK think tank) says that the average cost of developing an approved drug has risen from $199 M in 1970 to more than $1.9 B today.  They cited four factors for this:

• Soaring out of pocket R&D costs
• A success rate that has been halved from 1:5 to 1:10
• A vast increase spent in clinical trials up from 6 years to 13.5 years
• Significant increase in cost of capital due to increasing regulatory complexity

Not everyone agrees with this of course, but if taken at face value the results are sobering.  The Financial Times after looking the report over said that the increase to 13.5 years alone was enough to scare off venture capitalists for good. 

Posted by Bruce Lehr Dec 2nd 2012.

Big Pharma Scramble for China Foothold

Fierce Biotech this morning reports on the top 10 Big Pharma companies investing in China.  Clearly, these companies are jockeying for position to be able to exploit commercial opportunities in the BIG Chinese market.  In many cases, these is seen as essential to future company growth and survival given some of the issues with patent cliffs, and stagnant growth in many of the traditional Western markets.

Pharma investments are aimed at gaining market access and in particular gaining face time with health budget decision makers.  Investment in China is certainly seen by the government to be a "good thing" and goes a long way toward establishing credibility. Hooking up with local drug companies and developers is a good way to enter the market.  Alliances with local players may ultimately be a necessity for the Western companies to crack this market -- and many have established early relationships accordingly.

This is interesting to me in that many of these same companies right now are trying to eliminate China-produced raw materials from their supply chains. Yet, if their goal is to crack the Chinese market and to partner with local developers and manufacturers to do so, then how can they eliminate Chinese suppliers in the long-term?  They can't.  You will want to source locally for manufacturing support -- maybe not some specialty items but bulk of raws will likely come from local sources.  The economic drivers and incentives are just too great in my view -- and local goverment will expect it.

So time is now to start qualifying the best local suppliers, and to educate and incentivize them to continually improve their quality systems in anticipation of them being integral to a long-term supply chain.  It only makes sense.

Posted by Bruce Lehr Nov 19th 2012

Scope Creep Runs Up Clinical Trial Costs

Should we blame all the higher costs of clinical trials on the regulatory bodies, like FDA? No, suggests a new study from Tuft's Center for the Study of Drug Discovery. The study claims that one 1 in 5 procedures performed in late stage drug development is done to pursue  "supplementary secondary, tertiary, and exploratory endpoints."  This adds on average $1.1 M per trial. Across the industry that accounts for $4B to $6B per year for non-core endpoints -- enough to fund 2 x 2 Presidential campaigns!

Tuft's says that biopharm and pharm companies should take heed of this study result and can act on it to reduce development costs. Maybe that would save a few jobs in this industry. It certainly would likely make shareholders happier. See Fierce Biotech.

Posted by Bruce Lehr Nov 7th 2012.

 

 

The Biotech Graveyard Report for Halloween

Fierce Biotech just published its 2012 Biotech Graveyard report - the 4th installment in the series chronicling the demise of biotech's for the year. This year's list is shorter than in year's past with only 5 companies that qualified (though several others as explained by Fierce could join them sooner rather than later).  This year's Failed Five (wonder if they all went to Michigan?):

1. Biolex Therapeutics - failed to earn a C (hepatitis that is)
2. Genta - lost its long battle with cancer
3. Halcyon Molecular - yes. the Halcyon Days are over with $100 genome
4. Neurologix - could recover from shaky start (or finish) with Parkinson's
5. Inspiration Biophamraceuticals - failed to inspire with Hemophilia

Let's send them out with a song.

 

Posted by Bruce Lehr Oct. 31st 2012.

Capital Efficiency -- That's the Ticket for Biotechs

Another good post from Life Sci VC blog that speaks to the downside of raising too much equity for a biotech -- assuming the investors would actually like to recover on their investment. In looking at the top 10 financing rounds for biotechs in 2007, the following results were observed:

• 4 of 10 resulted in significant losses for investors
• 1 of 10 is sitting at or near cost
• 3 of 10 resulted in returns at or above 2x
• 2 of 10 can't be given a final score

The conclusion is that this sample of 10 is very close to what one would expect to see across investments in all of biotech -- as compared to actual return portfolio over the last 30 years (50% at a loss or return only cost, 35% made more than 2x their invested capital, 15% in process).

This seems counterintuitve if you believe biotechs with well-heeled funding are more likley to be successful.  The data says no -- it apparently doesn' t alter the spread of risk. If that is the case, then having adequate investment to operate but not too much to add more risk in terms of earning a return, i.e. being more equity efficient would seem to be the better strategy. So us investors should be seeking managment teams who efficiently use their capital rather than putting it into a huge warchest. That is --- if we want to earn a better return. 

I wonder if that idea will translate to R&D investments in pharma -- where sheer size is being reduced and presumably more thought being put into risk/return decisions with development programs.  And, in big pharma's current penchant for striking deals with much smaller upfronts and basing them on milestone payments.  That would seem to me to be somewhat more analogous to biotech raising less equity capital and using it more efficiently.  Will forcing companies to work with lower upfronts be more efficient and result in more success?  Hmm.

See more comments from In the Pipeline on this topic.

Posted by Bruce Lehr Aug 29th 2012.

 

Are Stock Buy Backs Pharma's Best Investment Strategy?

Bruce Booth published a nice analysis in his Life Sci VC blog a couple days ago, where he looked at the amount of money the top 15 big pharma companies spent in the past two years on buying back their own stock. Any guesses as to his tally? 

Would you believe $75 B -- yes with a big B - in past two years?  J&J leads the pack with $14.3 B and it trails down to Lilly's mere $420 M in 15th place.  How does that $75 B compare with other investments in biopharma sector?

• It’s bigger than the NIH budget for both 2011-2012 by nearly 25%. 
• It’s 4.5x bigger than all of the private venture-backed M&A that occurred in the past 18 months – and that involved over 70 biotech companies. 
• It’s 12x bigger than the sum total of venture dollars invested in biotech in that period. 
• Its nearly 80x bigger than all the capital raised by fifteen biotech IPOs during that period. 

That's big.  It's long been debated whether stock buy backs provide the best return.  Many think buy backs are a sign that a management/board has run out of ideas as to where to invest.  Not usually a good thing. Companies will not stay healthy unless they can continue to grow their sales and profits.  Buy backs generally provide a (somewhat unpredictable) increase in price per share in short term -- but the street and investors seem to like this. 

However, a short term bump may not compensate investors at all for long term gains they could have had if the money was better invested in higher return projects.  The pharma industry has traditionally been fueled by innovation and R&D spending.   R&D returns haven't been so great in the past decade (across the industry) so aren't as in vogue right now.  Regardless, it is difficult for me to see how pharma companies will heat up their revenue and profit growth without more new products -- that normally come from R&D efforts.

I had a boss who used to say you can tell a company's strategy by how it chooses to spend its money.  Are stock buy backs pharma's growth strategy?  Is that the best they can do with piles of cash? 

This one resonates with a few commentators. See more at In the Pipeline and Fierce Biotech.

Posted by Bruce Lehr Aug 24th 2012.

Biotech IPOs Beating Tech's Big Names

From Luke Timmerman, a tale that the 9 biotech IPOs so far in 2012 are not only doing better than expected but are actually leading more prominent Tech company IPOs from this year. From his post this morning:

Regular readers of this column [Xconomy's BioBeat] know that I’ve long been skeptical about how much appetite investors have for biotech IPOs. But I did notice some “modest signs of life” in the IPO market a few months ago, and was curious to follow up and see what has happened. By my count, there have been nine biotech IPOs so far this year, compared with 12 in all of 2011. That still says to me there’s limited demand from investors for new drugs, devices, and diagnostics. But of those nine companies that made it through the IPO gauntlet, six are trading above their IPO price and none have crashed.

So all is not lost in the Land of the Biotech IPO.

Posted by Bruce Lehr Aug 13th 2012.

More Opinions on Drug Development Costs and Innovation

The article on "innovation crisis myth", replete with its low estimates for drug development costs, that appeared in last weeks British Journal of Medicine sparked more than a little commentary from various quarters.  As an emotional issue, this one resonates well. 

Here is Derek Lowe's post on this In the Pipeline as well as today's response from the BMJ articles co-author Donald Light. Derek is a vocal critic of the low ball drug development cost estimates.  Dr. Light, as is his wont, sticks to his guns and repeats his claimed cost of $43 M for the "net, median corporate cost of Development". 

You can read both their points and decide who you think is closer to correct.  Despite the heavy qualification of what Dr. Light's figure purportedly represents, I still think he is way low (by a factor of 10). Though he likely is also correct about the $1.3 B industry figure as being grandly inflated -- which of course leads to a ripe ground for controversy. 

PhRMA also has a dog in this fight so I will link to their statement on the debate as well as comments from PharmTech Talk.

Posted by Bruce Lehr Aug 13th 2012.

Number of Life Science Venture Capital Firms Drying Up

A couple good posts on the state of venture investing in the Life Sciences sector are here.  The first from Pharmalot summarizes a recent PricewaterhouseCoopers and National Venture Capital Association report that shows that life science VC investing fell 9% in dollars and 6% in numbers of deals in Q2 2012 with $1.4 B invested. This is the fourth consecutive quarter of decline. The biotech portion of life sciences received only $697 M across 90 deals which represents the lowest quarterly output since 2003. Yikes!

Where Have All The Venture Capital Dollars Gone? // Pharmalot.

The second post comes to us from the Life Sci VC blog.  It tells a tale of woe with regard to the number of firms actively participating in life science VC investing. From the blog's data, it appears that about half the venture firms investing in VC in 2007 have gone by the boards in that sector in 2012. See data plotting number of firms participating in all biotech financings and in first financings in particular.  Both have fallen by about 50% in the past 5 years.

Conclusion is times are tough in Life Science VC which should come as no surprise to those following the area. Hopefully, the result of this will be that natural selection will favor the best projects receiving the future funding more preferentially -- which in turn could increase the returns for investors and spur more investment.

Posted by Bruce Lehr Jul 24th 2012.

Biotech Funding Blues

The bad news?  Fewer deals happened in the 1st half 2012 -- with only 59 in the last Qtr.

Worse news?  Deals are also smaller -- averaging only $9.3 M per deal or back to 2007 levels.  Plus back ends have shrunk in size as well.

Worst news?  IPOs are non-existent.  Total global VC dollars spent on biotech dropped by 43% over prior year to only $550 M in 1st half.  European companies only received $48 M of that.  OUCH!

In fact, biotechs raised only $2.76 billion in the second quarter, down 46.4%. For the full first half of the year, private and public biotechs raised only $7.9 billion, down 40% from the same period in 2011.

See rest of the story here in Fierce Biotech (here and here).

Posted by Bruce Lehr July 11th 2012

 

Capital and Tax Policies Burden Biotech Says Industry Leaders

This reports on a recent survey conducted by BIO of 170 biotech "industry leaders" and another 800 of our fellow citizens who are registered voters concerning the state of the biotech industry and some attitudes toward it.

PharmTech Talk » LIVE from BIO 2012: Capital and Tax Policies Burden Biotech, but Optimism Remains.

When the survey was conducted 5 years ago, 79% of industry leaders said they were "optimistic" about biotech's prospects.  This year that figure dropped to 63% in the optimists club. Key challenges (obstacles) cited for the industry were regulatory burdens and lack of capital.  Tax concerns were also cited.  I tend to be more dismissive of the first two complaints for companies with good projects -- but I do from time to time advocate here for more (continued) government tax credits and grants for the industry. 

The voter side of things was a bit scary to me. Apparently, 56% of voters favor enactment of US tax policies and direct funds that would help biotech businesses. It turns out though, when voters are actually educated as to what the biotech industry does, the number rockets up to 83%. Yikes!

Posted by Bruce Lehr Jun 22nd 2012.

Is Cancer Research Focused on Too Few Targets?

Just when we were all pumped about the news coming out of ASCO this week, leave it to the Life Sci VC blog to throw us a curve by pointing out how concentrated the pharma industry's efforts are with regard to cancer targets being investigated.  And, Bruce's argument is supported by facts and data. I hate that. I try to never let the facts get in the way of a good story.

The blog post notes that of the 990 cancer programs, greater than 20% are aimed at 8 targets, each of which has more than 24 programs in clinical development. VEGF itself has 70!  The data is presented in a bar chart in the post. By Bruce's estimates, $5 B+ has been spent in the past few years on these programs.  He points out that they ALL can't be winners.  This appears to be an egregious waste of resources at the expense of more novel but unproven targets.

This illustrates one of the problems we've been seeing with the lack of productivity of Big Pharma R&D as embodied by failed programs and low ROIs.  There's a lot of me-too thinking that undoubtedly arises out of a desire to reduce risk and increase success -- but the calvary charge of projects concentrated on a few targets virtually guarantees a lot of commercial failures.  Only so many people can fit in the pool before it overflows.

It is an interesting post and I think you should read it for yourself.  He concludes the pieces by saying,

"We need to stop being target lemmings, or our group-think and risk avoidance will run our industry off a cliff."  Now that's something to ponder (and correct if you agree) before it's too late.

Posted by Bruce Lehr June 7th 2012.

 

Pharma Corporate VC Investment Increases Odds of Success

Burrill & Company’s June 2012 report indicates that that pharma corporate venture capital (CVC)-backed companies have a higher rate of overall success than those without their involvement.  The analysis includes 2907 therapeutics companies that raised VC dollars between 2000-2010 across 5100 rounds of financing.  Corporate VCs were investors in about 10% of companies, and this pool of 286 companies had what appears to be a markedly higher hit rate: a ~60% higher rate of licensing deals, M&As and IPOs. See Life Sci VC blog.

These new data from Burrill are entirely consistent with pharma corporate VC playing an important role in the ecosystem, and that they seem to get involved in good companies that possess better than average probabilities of success.  It is uncertain whether corporate VCs are just good company pickers because they look for things their Pharma  R&D organizations may want, or if they actually help shape a better outcome once they get involved either through the value-added “stamp” of Pharma validation or through active deal management contributions. 

I suspect they add value both by picking companies working in areas where they have keen interest and knowledge -- and by helping to shape and manage deals in areas where they have honed expertise. One thing for sure, it looks like having a CVC on your side heightens your odds of success.

Posted by Bruce Lehr June 1st 2012.