As Kinsella Affair Goes Global, Sofinnova’s Papiernik Says Don’t Blame Big Pharma for Weak Biotech Ventures

the biggest of the biggest pharmas. They all are throwing the baby with the bathwater, totally changing what they call R&D into S&D, you know, Search and Development.

So we should be on top of the world. We should think, God! Yes! we have proven we can innovate, from early innovation to the market.

Basically what Kevin is saying is that it’s so unfair. We get a deal and we’re [supposed to be] so happy to get our money back and the hope of potential earn-outs that never come. That is basically because the venture industry is at an incredibly weak position, because the cash has not been forthcoming from our own limited partners, and we are under pressure. [VC] funds are under pressure, there are no more funds for some of them. Because of that pressure cooker of the venture industry, we are pressing our companies for liquidity. We are pressing them for liquidity, maybe a touch too early for what the companies can do. That’s my hypothesis.

There are deals where the balance of power is not so skewed, and there are a number of such deals, where you have five term sheets for an acquisition. Those deals a pharma has to do. They are bidding actually quite high prices for products that are still in the making. What Kevin is describing is that we as an industry basically need that cash so badly that we are agreeing to bad deals.

Xconomy: Is it different Europe, or do you and Kevin share a global perspective?

AP: It’s totally global. Our companies get sold to global companies in Europe and the U.S. On the IT side, I think it’s quite different. Social media is happening in the U.S. But in the life sciences, I would say it’s a totally global industry. The pharmas have no preconception where they buy companies. They are buying companies for the compounds they have or the technologies they have. From San Diego to Paris, it’s precisely, exactly the same.

X: Kinsella pointed to three specific areas of abuse, as well as a kind of overall, hardball business posture that isn’t really conducive to sustaining the venture biotech ecosystem.

AP: So why do they do it? Because they can. To me that’s it. The equilibrium only happens if you have the same pressure on both sides. And there isn’t. I think it’s because of the weakness of the venture-backed companies, partly because of the weakness of the venture groups.

I’m not excluding ourselves from that. We have the good situations and bad situations. We have signed deals where we

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.