Is big pharma risk averse?
Quintessence Biosciences President and COO Laura Strong argued that, particularly with all the layoffs happening in big pharma R&D, innovation comes from outside to mitigate much of the early risk. And that good science just doesn’t always equal a commercially viable product.
“For potential dealmakers, you’re dealing with Wall Street’s perception of the assets you’re buying,” Strong said, speaking at MedCity’s Mid-America Healthcare Venture Forum in Chicago. “So it makes more sense to buy assets that look like someone else’s assets.”
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The people in the driver’s seat, she said, are folks chasing immunooncology – checkpoint inhibitors and CAR-Ts have never been hotter – but it’s hard to get acquired or get funding unless you fit into a certain mold that investors and acquisitors understand. And to do that, you can’t quite go against the grain. She actually blogged her argument here:
When “selling” your science/technology, you should be able to articulate what problem your product solves for your customer. While this tidbit sounds like sales 101, I spend a lot of time figuring out whether and how my product fits into the pipeline of a potential pharma partners or the portfolio of a venture capital company. In oncology, this exercise has become more challenging as our industry has brought a number of great drugs to market over the last decade. But funders/partners see too many stories to do the heavy lifting of figuring out market fit to understand if they should buy your product.
Geeta Vemuri of Baxter Ventures thought otherwise: It takes entirely too much capital to ever consider big pharma risk averse. Investing the requisite multimillions to get a product from bench to bedside is inherently a risky task – and the concept of outsourcing much of the early intellectual work rather than keeping it in-house shows trust in risky, external entities.
Vemuri, speaking from a corporate investment perspective, did say that 80-90 percent of Baxter Ventures’ investments are made with the intention to ultimately feed the into the drugmaker’s pipeline.
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Strong said there’s a disconnect between early and midstage companies that are centered on developing the science of a product – and its commercial viability. But the fact is that most venture capitalists are looking at hundreds or thousands of deals yearly – so to stand out from the pack, sometimes it’s all about appearing familiar and, of course, presenting fast returns. If you aren’t immediately compelling or standout, you’re swallowed by the quagmire of competition.
“Entrepreneurs look for investors who believe in their science, but finding the right commercialization partner – thats really underappreciated by early and midstage entrepreneurs,” Strong said.