Posted by: Audrey Erbes | October 29, 2011

Searching for Startup Funding and Improved Job Creation plus Events

Another week has whizzed by. I continue to look for and monitor potential answers to the funding of life science startups dilemma and better understand the macro picture on future job creation or, at least, a halt in the decline of jobs in the U.S.

It’s often the case that there’s a rush to produce trained personnel based on a current shortage but when the long training for scientists and engineers is over as in the life sciences, there may no longer be a shortage. I personally faced this upon completion of my Ph.D. in the social sciences at the same time others in life sciences did. In fact, upon completion of my degree I learned there was 70 other new Ph.D.s in the Bay Area alone looking for those same academic social science appointments for which the U.S. government paid our schooling to fill. Positions that became available were eliminated as the academic teaching shortage disappeared with the graduation of baby boomers. I don’t know the numbers but others in my peer group advise they faced the same situation in science. Fortunately, for me and many of the Ph.D.s in science, there was the growing field of Biotech to absorb our talents and provide employment. I landed a marketing research position at Syntex, an early biotech company in Palo Alto which was the start of a new career.

With the disappearance of much of the VC money based on the current ill fit of the earlier VC business model that depended on IPOs and exits in 5 years, companies are looking for funding from other sources. Angels and government funding are among other sources as well as foundations but this may not be at the levels of earlier funding from VCs who looked for early exits via IPOs. The rush to invest in biotechnology is no longer present as investors have learned more about the high risk in the field and investors in general are looking for faster return in other industries like social media.

For the past several years the industry has turned to Big Pharma and their venture funds to do collaborations to pay for the later clinical trials but now Big Pharma is returning to the academic trough to identify new discoveries and nurture them through to end of Phase I while they remain in the university environment. I can’t see how this will work since the incentives in academia are so inconsistent with those required for the development of an asset through early stage of development for a regulatory filing. And who said that full time costs of academics is any cheaper than that of employees in one’s company.

And if Big Pharma is directing it, how does this avoid the same problems Big Pharma has had in identifying the winners among their own discoveries. I’ve heard many a presentation by former and current R&D heads from big companies say that biotechs can do this so much better and more cheaply than their organizations. They can’t create the environment internally that mimicks that of biotechs. I remember sitting in BIO meetings in the late 90s where Big Pharma management claimed it was impossible to work with academia as source of innovation back then–won’t they again find the same dissatisfaction with employees of bureaucratic organizations for which academia is known?

The biotech entrepreneur carried out this function of identifying potential technology/products and taking them outside the university via tech transfer agreements. They brought Big Pharma derisked potential products at later stage of development. Will these new experiments in accessing innovation impact negatively on the biotech formation model?

I don’t have the answers to these questions, but did assemble some slides for discussion at last Tuesday’s Bio2Device Group that you might find of interest. You can download the presentation here by right clicking on the highlighted title Some Thoughts and Comments. The complete report Future Pharma by KPMG which provided some of the charts can be downloaded also.

Also discussed at the same meeting was the failure of the repatriation of tens of billions of dollars by corporations in 2004, many of them large pharmaceutical companies, to benefit job creation in the U.S. There will be an attempt to once again allow corporations to return profits made overseas at fraction of their otherwise 35% tax rate. The rationale was that the returned profits could be used for investments in the U.S. that would result in job creation. Despite the requirement in 2004 that companies not repurchase their stock or pay out bonuses to management with the money, that regulation was not enforced and the money was spent for just that or  invested overseas rather than in the U.S. for the most part.

This coming week we continue to have a rich assortment of programs available in the Bay Area. Also be aware of the 10 days underway for celebrating the 10-day Bay Area Science Festival which ends on Sunday, Nov. 6th with Discovery Day at AT&T Park. See details about all of these events highlighted below in the attached list of events through early December. You might want to take your children to AT&T Park on the 6th for this free event which will expose them to more than 100 hands-on, fun, interactive science and technology exhibits and activities created for families and kids.

  • BioCentury TV Today, See the Webcast Sunday, October 30, 2011, Continuously available starting at 9:00 a.m. EDT; Topic: “Venture Stress: Fissures Under Biotech VCs;” Speaker: Host Steve Usdin and NEA General Partner David Mott
  • Bio2Device Group, Tuesday Morning, Nov. 1, 2011; Topic: “Wireless Health: Needs, Applications, Challenges, and Devices;” Speaker: Marta Gaia Zanchi, PhD, Principal, Consultant and Founder, Medinnovo LLC, and Director of Regulatory Strategy, Vascular Access Technologies, Inc
  • SRI, Wednesday Evening, Nov. 2, 2011; Topic: Wonder Dialogue—on education and developing the scientists of the future. This event is part of the 10-day Bay Area Science Festival
  • Palo Alto AWIS, Wednesday Evening, November 2, 2011; Topic: “Comprehensive Genomic Profiling in Oncology: Leading a Small Scientific Team to World-Class Excellence;” Speaker: Maureen T. Cronin, Ph.D., Senior Vice President, Research and Product Development, Foundation Medicine, Inc.
  • MedTech Frontiers, Thursday Evening, Nov. 3, 2011; Topic: “Protecting Your Intellectual Property Under The New America Invents Act (AIA);” Speaker: Nick Soloway
  • BayBio Pantheon Award 2011, Thursday Evening, Nov. 3, 2011
  • East Bay AWIS, Saturday Morning, Nov. 5, 2011; Event: “Build Your Professional Network to Energize Your Career Using LinkedIn for Your Job Search;” Speaker: Mauri Schwartz, President, Career Insiders



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