Posted by: Audrey Erbes | May 8, 2011

Stimulating New Ideas for Early Stage Funding plus Events

As venture capitalists are now more selective with their investments, opting to include in their portfolios less risky and later-stage companies, start-ups looking for that first round of financing are finding it exceedingly difficult to raise the initial funding to give a kick start to their venture. How can you even discuss the “valley of death” in going from Round A to Round B and C when there is no available Round A funding to create the rim of the valley! In the first quarter of this year, 7 biopharma companies completed A rounds for an average of $8.8 million per transaction (not including AGA Diartis Pharmaceuticals Inc.’s Series A, which was undisclosed) versus average of $18 million per deal in first quarter of 2010. In the opening quarters of 2008 and 2009, Series A’s were bringing more money from more transactions, with a big increase in Q1 2009. Source: In Vivo Blog, May 2, 2011.

Over 200 dealmakers attended the Deloitte Recap Allicense meeting at the St. Francis Hotel for two days last week to discuss “Bringing Innovative Financing & Creative Partnering to the Table”. Although the sessions didn’t find a solution to the scarcity of funding for early stage companies in preclinical research phase or the failure of Big Pharma to produce new products with sufficient revenues fast enough to replace lost blockbuster income, there was some stimulating information and discussion about changes and experiments in the development model. A new funding approach taken by Ablexis LLC of South San Francisco to overcome difficulty in getting initial VC funding was presented by CEO, Larry Green, Ph.D. and discussed in detail by panelists representing partners. Ablexis couldn’t get the typical Series A venture funding for their AlivaMab Mouse technology, an innovative next-generation platform for antibody drug discovery, so they created a consortium of five top pharma companies led by Pfizer and Pfizer Ventures along with one of the most creative venture firms, Third Rock. The idea was to leverage access to a novel and innovative antibody-producing mouse to raise IPO-alternative funding for the young company as well as suggest a potential “exit” while validating the technology with ready customers up front. The novelty was remaining a LLC entity and requiring that members of the consortium provide an upfront nonrefundable seven-figure payment. Upon delivery of the AlivaMab Mouse strains, Ablexis is entitled to receive an eight-figure payment from each consortium member in return for granting specified non-exclusive rights to utilize the technology in antibody discovery programs. See details at Investors like a deal where the potential customers have already jumped in the pool up front of their investment.

Another new trend involves a return by Big Pharma to reassess the academic environment as a source of technology and products. There have been several announcements of big companies forming new research alliances with universities. Another approach vs. earlier tech transfer deals is needed to somehow reduce the time and cost of validating a new discovery to point of proof-of-concept. Regis B. Kelly, Ph.D., Director, California Institute for Quantitative Biosciences (QB3) presented such a new approach for how companies can partner with academia in a new way. Rather than taking the discovery out of the university setting at the very early research stage, it was determined that it was much more cost and time efficient to leave the discovery in hands of academic labs of UCB, UCSF and UCSC through to proof of concept stage before exiting to company labs. QB3 provides not only proof-of-concept funding via a venture fund they have created, start-up incubator space and educational programs, but actively partners with private biopharma industry to advance medical innovations from the academic bench to bedside. Of course, academicians will have to demonstrate motivation to behave in new ways and embrace entrepreneurial behavior, especially, with regard to IP issues.

The closing panel offered a lively session with high energy from panel of long-time industry watchers and dealmaking experts including Roger Longman, CEO, Real Endpoints LLC; Gino Santini, retired SVP Corporate Strategy and Business Development, Lilly; and Barbara Kosacz, Partner, Head Life Science Practice, Cooley LLP charged with discussing conference highlights. The panel took off on discussion that ignited the audience of dealmakers as they shared exciting ideas and discussion of possible solutions to the industry’s development and funding problems.

You have a chance to participate in  a lively discussion this coming week. Plan to attend the Bio2Device Group meeting this coming Tuesday evening at Wilson Sonsini in Palo Alto to hear another industry luminary, Bob Easton, CEO, Scisive Consulting, discuss these concerns and ideas.

See highlights of this week’s events below and int attached list of meetings with full details:

  • BioCentury TV Today, Viewable After Sunday Morning, May 8, 2011; Topic: “Regulatory Critical Path: Is the U.S. Falling Behind Europe?”–Dr. Raymond Woosley, retiring leader of The Critical Path Institute and “Stem Cell Ping Pong: What happens next?”
  • Bio2Device Group, Tuesday Evening, May 10, 2011; Topic: ”Thirty-Five Years of Medical Technology Progress:  From Microprocessors and Monoclonal Antibodies to Cancer Cures and TB Tests in the African Bush;” Speaker: Bob Easton, Chairman, Scisive Consulting LLP
  • Stanford Bio-Design, Tuesday Evening, May 10, 2011; Topic: Innovator’s Workbench; Speaker: Ezekiel Emanuel, Chairman Bioethics, National Institutes of Health, Bethesda, MD
  • Stanford Graduate School of Business, Healthcare Innovation Summit 2011, Wednesday, May 11, 2011
  • NCDG Second 2011 Quarterly FDA Community Forum, Wednesday Evening, May 11, 2011; Topic: “Quality Management within the FDA: Management Responsibility, CAPA, Complaints;” Speakers: Moderator, George Marcel, Quality Assurance Manager, ArKal Medical; FDA speaker, Mo Samimi, Ph.D. Quality System Manager, Office of Regulatory Affairs, US FDA Office of the ACRA
  • Northern California RAPS, Friday Midday, May 13, 2011; Topic: “Regulatory and Quality Records Risk Management: What You Need to Know;” Speakers:Nancy Singer, JD, RAC, president, Compliance-Alliance, LLC and Virginia Perry, RAC, CQE, ScD, partner, Perry-D’Amico and Associates
  • Children’s Global Health Initiative, Saturday Afternoon, May 14, 2011; Topic: “Collaborate for Africa

You can download the pdf file of May-June meetings by right clicking on the title Audrey’s Picks for Week of May 8th. I look forward to seeing some of you at Bob Easton’s talk on Tuesday evening.



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