Devices & Diagnostics

At Biotech 2011, companies identify financing options

The challenge of identifying and establishing financing for early and mid-stage companies is forcing companies to be more creative and making the series of panel discussions on the subject at Biotech 2011 in Philadelphia a high priority as companies and investors fleshed out what some of those structures look like. “Funding is patchwork,” said Al […]

The challenge of identifying and establishing financing for early and mid-stage companies is forcing companies to be more creative and making the series of panel discussions on the subject at Biotech 2011 in Philadelphia a high priority as companies and investors fleshed out what some of those structures look like.

“Funding is patchwork,” said Al Altomari of Agile Therapeutics. “There’s no one strategy. You have to take advantage of every source of financing that comes your way.”

Mark Singer of Osage Partners supported the importance of establishing a diverse network of funding. “You have to have a hundred different financing strategies because you never know how much you will raise. It used to be that the pathways were very straightforward. But now, you have to target several different amounts and have a strategy for the different amounts you are seeking. If you can raise $500,000, take it.  If you can raise $3 million, take it. … And you have to assume it will take [several] months.”

Government funding. If you want government funding, get to know your local congressmen, one panelist advised. Government grants can be a useful source of funding, particularly the Department of Defense. It might take time and the application procedure is a bit tedious. Another panelist noted that it was his company’s scientific advisory board that suggested the National Institutes of Health as a source of funding, much to his embarrassment, but “it was a godsend.”

Scrappydo. Venture capital firms like companies that work hard with the funding that is available to them. “You get scrappiness points with VC’s  if you can come into discussions with a little more street cred,” Singer said.

Partner with European company. Brian Lenz of CorMedix said one of the products his company makes, Neutrolin, an antimicrobial/anticoagulant solution that sits in a catheter, is classified as a medical device, but is considered a drug in the U.S. This made the process of getting FDA approval lengthy. So, it halted clinical trials in the U.S. and is in the process of looking for a partner in Europe and will then look at eventually bringing the product back to the U.S.

Capitalizing on women. Hank Safferstein of Cognition Therapeutics, a company that focuses on developing treatment for neuro-degenerative diseases such as Alzheimer’s, said his company received angel investment from Golden Seeds partly because of its founder and chief science officer, Susan Catalano. Golden Seeds invests in companies led by women who have a  substantial equity stake in the business. The initial investment opened up a nationwide funding network to the company.

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A Deep-dive Into Specialty Pharma

A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.

Bio bucks. In a risk-averse market it is much more palatable for companies to split the risk between several businesses. In this deal structure, a venture firm will initially give $5 million to $10 million up front and as the company reaches certain milestones with its product, it will invest more “bio bucks.” Ultimately the total investment might be as much as $80 million.