big-name VC firms announced interesting hires last week, as 5AM Ventures snapped up former Merck R&D honcho Peter Kim as a venture partner, and NEA enlisted Elliot Sigal, the former R&D boss at Bristol-Myers Squibb, as a venture partner. These are just a couple more signs of increasing coziness between the few active biotech VC firms left, and the pharma companies they need to sell stuff to every couple years. While VC firms will continue to throw lots of partners overboard as part of the great shrinkage, they will occasionally hire someone who can open doors to the guys who write big checks at Big Pharma.
A couple interesting company personnel moves caught my eye. Art Krieg, the former CEO of Cambridge, MA-based RaNA Therapeutics, took a new job as chief scientist across town at Sarepta Therapeutics (NASDAQ: [[ticker:SRPT]]). Krieg is a well-known figure in RNA therapeutics, and his move raises questions about RaNA and is a plus for Sarepta. Then, yesterday, Genentech said Sandra Horning has been promoted to be its new chief medical officer, replaced Hal Barron, who left for Calico, the Google-backed anti-aging company.
Whither Crowdfunding? Will this be the year that equity crowdfunding finally catches on for biotech? I suspect not.
AngelList started to get some traction last year among tech companies, and Poliwogg had some provocative things to say at biotech conferences last year as it tried to get its ducks in a row. Today, Poliwogg CEO Greg Simon plans to announce that Poliwogg’s website is going live to take investments, and a couple early adopters have joined his cause, like the Epilepsy Foundation and Aisling Capital’s Dennis Purcell. The Epilepsy Foundation has agreed to help vet epilepsy drug developers that people could invest in on Poliwogg, while Purcell, a well-known biotech financier, has agreed to personally invest in the company and serve as a special advisor.
Those signs show that Poliwogg is doing the necessary spadework to build an equity crowdfunding platform, but these are still very early days. When I spoke to Henri Termeer a few days ago, he said he considers crowdfunding “very, very promising” but mostly in the sense of engaging patient advocates/philanthropies to invest in startups like they already do with research institutions. The usual caveats still hold with angel investing in life sciences—it’s hard for a startup to scrape together enough money, and people who invest that early are likely to lose their shirts, or get their ownership stakes hopelessly diluted by successive financing rounds to come. If someone as rich and savvy as Termeer is worried about that, think about the little angel investor trying to get into the crowdfunding game.
Poliwogg is seeking to set up exchange traded funds (ETF)-like investment baskets that will mitigate some risk through diversification, but I suspect it’s going to take a long time for this concept to gain momentum in life sciences. As Bruce Booth, a partner at Atlas Venture, put it in an email: “I think crowdfunding has a ton of promise, but don’t think in 2014 it will be a big player. The sheer math of the opportunity is compelling: if only a very small proportion of high net worth families/investors channeled a tiny fraction of their annual investment allocation into early stage life science investments, it could have a material and significant impact on the sector.”
Illumina/Ion Torrent showdown. These two companies engage every year at JP Morgan in a game of “please marvel at our awesome powers, and audacious goals in DNA sequencing!” This year, the story will once again be about the push toward genomic and molecular diagnostics. Last week, both Illumina (NASDAQ: [[ticker:ILMN]]) and Life Technologies’s Ion Torrent unit (soon to be part of Thermo Fisher Scientific) announced they have struck deals to provide high-speed DNA sequencing capabilities to Quest Diagnostics (NYSE: [[ticker:DGX]]), a big player in diagnostics. Illumina has the upper hand here, and shows no signs of easing up. I look forward to hearing the scuttlebutt about this matchup from diagnostics industry players.
Pharma innovation models. Every major pharma company is bending over backwards here to show off their latest new lab, new scouts prowling the biotech startup scene, or new initiative with the word “innovation” in it. Zzzzzzzzz. Most of these initiatives can be safely ignored. Pharma, if anything, will continue to obtain innovative new products much the way it has for years—by acquiring them from little companies.
All together now: “immuno-oncology, immuno-oncology.” This phrase didn’t exist a few years ago, and now everybody and their brother-in-law will be tromping around Union Square claiming they are an “immuno-oncology company.” There are a few companies who showed last year they are players to watch—Bristol-Myers Squibb, Merck, and Genentech/Roche. A fascinating showdown is developing between Novartis and the startup of the moment, Seattle-based Juno Therapeutics, in a subsector of immunotherapy that uses “chimeric antigen-modified receptor T-cells” or CAR-T immunotherapy. Essentially, a lot of fancy slides will be drawn up with buzzphrases about immunotherapy, which will be little more than hot air.
The Rare Diseaseification of Everything. Got a drug for obesity? Try to find some super-awful rare genetic form where people will pay a fortune for your compound. Got a drug for diabetes? Ditto. Depression? Oh, yeah. The “Rare Diseaseification” of biotech is more than a passing fad. I believe it’s a long-term trend, driven in part by pricing pressure against mass-market primary care drugs, and by a clearer understanding of underlying disease biology, aided in part by genomics. So sharpen your pencils, folks, to learn about a lot of diseases you’ve never heard of, which (unfortunately) all come with annoying new acronyms.
Takeover Rumors. Investment bankers gotta send their kids to Harvard, and hedge fund managers do, too. So expect the usual speculation/agitation for the next big biotech takeover. San Rafael, CA-based BioMarin Pharmaceutical (NASDAQ: [[ticker:BMRN]]) is a perennial target, as is Bothell, WA-based Seattle Genetics (NASDAQ: [[ticker:SGEN]]). My own feeling, and it’s just a hunch, is that pharma companies will be unwilling to pay top dollar premiums for these companies because their prices got too high in the great biotech rally of 2013. I could easily imagine San Francisco-based Medivation (NASDAQ: [[ticker:MDVN]]) or Sunnyvale, CA-based Pharmacyclics (NASDAQ: [[ticker:PCYC]]) getting acquired, even at their princely valuations, this year, along with a few others. But those are not formal predictions. I’ll leave that to the people in finance.
IPO Queue. Will the IPO boom continue? I think not. A few decent companies are left in the IPO queue (Cambridge, MA-based vaccine developer Genocea Biosciences and Cambridge-based Eleven Biotechnologies spring to mind) but there’s a limited supply of NASDAQ-caliber companies left in private biotech land. That’s probably good news for the class of 2013. Investors looking for high-risk/high-reward members of their portfolio to complement the Gileads and Celgenes of the world will continue to look to the crop that went public last year.
Deals, deals, deals. The business development teams of pharma companies will descend on Union Square with dozens of foot soldiers (I’ve heard of companies sending as many as 50 people) to the conference. These people need to talk about more than just the weather and the National Football League playoffs. So, that’s why we had a full slate of news last week. Genzyme struck a megadeal with Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: [[ticker:ALNY]]), the RNA interference drug developer, which includes a $700 million equity investment. Alnylam turned around and spent some of its new cash, a full $175 million, to acquire Merck’s RNAi assets in its Sirna Therapeutics unit. Biogen Idec (NASDAQ: [[ticker:BIIB]]) found a dance partner in Richmond, CA-based Sangamo Biosciences (NASDAQ: [[ticker:SGMO]]), Eli Lilly (NYSE: [[ticker:LLY]]) did a deal to discover bispecific antibodies with Vancouver, BC-based Zymeworks, AbbVie (NYSE: [[ticker:ABBV]]) re-upped its existing partnership with Seattle Genetics (NASDAQ: [[ticker:SGEN]]), and AstraZeneca struck deals with Immunocore and Horizon Discovery, as part of its effort to once again become a relevant innovator.
OK, so is that enough news to chew over for one week? I, for one, am hoping to for the news to calm down a bit so I can get in some high-quality schmoozing. If you’d like to meet in person at the conference, I will be at the Unofficial Tweetup tonight at Blu on Market Street, and happy to meet any regular Xconomy readers. See you out there in San Francisco.
