BIO: A close-up on the biotech industry

Just got back from the 2010 BIO International Convention in Chicago – the Superbowl of the biotech industry.

Last year’s BIO was a decidedly gloomy affair as investment dropped to levels not seen since the mid-90s, but this year there was a cautiously optimistic tone as the industry adapts to the “new normal” of capital constraints.

Here are some take home messages from the event.1. Finance

According to Steve Burrill, 2009 was the best ever year for biopharma financing.  However, the bulk of that was accounted for by massive mergers (Merck/Schering Plough, Pfizer/Wyeth, Roche/Genentech and Dainippon/Sepracor).  Subtract those whoppers and the amounts are much more modest.

The IPO window creaked open slightly which allowed some of the more mature companies in the waiting room to get out.  In all cases the pricing was significantly reduced versus expectations and it seems that the beleaguered VCs were the ones who bore the brunt.

Nowadays it is necessary to be much more advanced to attract VC or pharma interest (i.e. Phase II clinical data at least) which does not auger well for the vast majority of emerging life sciences companies (95%).

2. Future Trends

Straining health-care systems will require the optimized use of drugs which may indicate that bioinformatics and pharmacogenomics plays are set to flourish.  I eagerly attended several biomarker/prognostic sessions at BIO looking for future champions, but came away with the impression that there is still a big gap between where we are now and what the market will require.  The companies who can get this right should do very nicely indeed.

There is only so much money that pharma, insurers and government can extract from one individual life and we’re close to that limit now.

3.  Tech Transfer

A session on novel approaches in tech transfer featuring our very own MaRS Innovation (“tech transfer on steroids”) attracted a lot of attention.  If the traditional model is broken, we need new ideas, right?

Here are some of them:

  • Karolinska Institute: No angel or VC interest locally so they raised their own $200 million commercialization fund
  • Imperial College: placed their emerging companies into a pool and listed it on the London Stock Exchange

Great to see such proactive approaches moving technologies closer to market in the absence of early stage investors.

4. Leading Economic Indicators

Mood: cautiously positive

Attendance: rather low (17,000) compared to the 25,000 levels seen a few years ago

Quality of swag in exhibition hall: low-to-medium

Most active nations: US, Canada, EU, China, Australia

MIA award: Japan

Most down-to-earth luncheon presenter: Former President George W. Bush

John McCulloch

John provides assistance to life sciences entrepreneurs in business strategy, management, intellectual property, financing and licensing. See more…