the banks, and then to financial markets. This time around it has been slower than usual because the 2008 collapse of mortgage-backed securities dampened enthusiasm for speculation across the board. When enough money has flowed in to fill the coffers of mainstream business, it eventually spills over to biotech.
No one should fall into the “this-time-is-different” trap. If anything is different, it is not biotech, but the macroeconomic environment, and that is a temporary phenomenon. With cautious investors sitting on cash, the Fed has been able to create extraordinary amounts of money without triggering either inflation from excess spending or financial bubbles from speculation. But the pressure on markets is building. Even real estate is showing signs of overheating in selected sectors.
If the strategic landscape is going to change in a meaningful way for life sciences, the industry itself must change. The occasional public-market orgy, while fun, won’t provide the needed support. The cyclical nature of public money, uncorrelated with product development, adds a level of risk that makes an already challenging financing equation unsustainable. Biotechs need money when they are ready to start the next trial, not when the Fed decides to print it.
The fundamentals of investing in early stage bio-pharma remain the same. Scientists still struggle to reliably translate findings at the molecular level into new therapeutics. As long as the industry pursues the same old business models in this situation, the results will be the same in the long run.
This happens to be one of the rare times when the market is so flush with cash that it can afford to
Pages: Page 1, Page 2, Page 3
Author: Standish Fleming
Standish Fleming is a 29-year veteran of early stage life sciences investing. He has helped raise and manage six venture capital funds totaling more than $500 million, and has served on the boards of 19 venture-backed companies, including Nereus Pharmaceuticals, Ambit Biosciences, Triangle Pharmaceuticals (acquired by Gilead Sciences) and Actigen/Corixa (now part of GSK).
He has extensive experience in all aspects of venture management and finance, including fund-raising, investor relations, operations and portfolio development. He has made investments, managed portfolio companies, raised funds, pursued business development, taken companies public and successfully exited investments through public-market sales and buyouts. In 1993, Mr. Fleming co-founded San Diego's Forward Ventures. He has made investments in almost every segment of the health-care industry, including pharmaceuticals, biologics, diagnostics, devices, services, and software. He has managed both platform and product companies, portfolio investments, and led or participated in financings at all levels, from pre-startup to PIPES in public companies, in both debt and equity. He has helped start more than 15 companies and served as founding CEO of eight. Fleming serves as a director of CONNECT, San Diego's support organization for the early-stage community, and is a past president of the Biotechnology Venture Investors Group. Before establishing Forward Ventures, He served as the chairman, president and CEO of GeneSys Therapeutics, (merged with Somatix and acquired by Cell GeneSys [NASDAQ:CEGE]). Fleming began his venture career with Ventana Growth Funds in San Diego in 1986. He earned his B.A. from Amherst College and his M.B.A. from the UCLA Graduate School of Management.
View all posts by Standish Fleming