No one would have been surprised if there was a lot of self-pity going around at this year’s Invest Northwest conference. After all, biotech investors have been clobbered like every other sector in the market, and one-third of public biotech companies are said to be running on their last six months of cash or less.
So it might surprise some people to hear the mood at yesterday’s Invest Northwest conference was neither depressed nor delusionally upbeat, but what I would call sober, and even steely. The two-day event, which continues today, drew a record 740 registered attendees to the Bell Harbor International Conference Center in Seattle to continue their hunt for investors, partners, or help of other kinds to keep their innovative life sciences ideas alive.
My notebook is spilling over with too many story ideas to cover in today’s wrap-up, but I thought I’d pass along some intriguing insights I jotted down from the lunchtime panel discussion. This was moderated by George Milstein, the investment banker at Wedbush Pacific Growth Life Sciences who I profiled earlier this week. The panel included Michael Emery of Rainier Funds, Allozyne CEO Meenu Chhabra, Arch Venture Partners’ Steve Gillis, and ZymoGenetics CEO Doug Williams. Here are the highlights broken out by speaker.
Steve Gillis, Managing Director, Arch Venture Partners
On why anyone should still invest in biotech: “Big Pharma, and to an extent, Big Biotech, has capitulated, and understands innovation is not their game,” Gillis said. “They’ll continue to buy assets, and buy companies.” He added that, “At Arch, our platform is to invest through human proof of concept without burning through gazillions of dollars, and if you can do that, you can get good returns and create value.”
On reacting to the downturn: Arch is doing its usual scrutiny of the technology and management teams at companies, but is now worrying more about a third variable—whether it is part of an investing syndicate with staying power to help a company reach its potential. “Will the other investors be there when a company misses a milestone? It’s another serious stare in the mirror you have to do before you write the check.”
On the impact of the mega-mergers like Pfizer-Wyeth, Merck-Schering Plough, and Roche-Genentech: “A lot of our companies depend on larger species in the food chain,” Gillis says. To mix the metaphor a bit, he added that when these deals get consummated, it distracts top management so they take their eyes off smaller company partners. “It can take two partners off the dance card” at the same time, Gillis says. That has encouraged VCs to nudge their portfolio companies to call up “some of the smaller fish” to talk about partnerships.
On what the government can do to help stimulate biotech: “If somehow you could influence regulators to think more about efficacy and less about overwhelming safety, that would help.” He added that in today’s regulatory environment, Seattle-based Immunex never would have been able to develop etanercept (Enbrel), the world’s best-selling biotech drug with more than $5 billion in worldwide sales. That drug failed in its original clinical trial of patients with sepsis, before Immunex pushed ahead with a second idea that was a winner—treating rheumatoid arthritis.
Meenu Chhabra, CEO, Allozyne
On sticking to the game plan:
