One again, Bruce Booth published a terrific post entitled Contrarian Opportunities in Biotech Venture. The crux of the article is that while big pharma is licensing in areas such as oncology, many VCs are molding their portfolios to fit the “downstream” demand.
Critically, as many pharmas have moved out of therapeutic areas such as anti-infectives, VCs have also followed suit and have eschewed investing in areas where big pharma is not interested.
Yet, as Bruce correctly suggests, the unmet needs are still there in these areas. Further, technologies have evolved whereby many programs can be de-risked earlier and for less money, throughout the design and execution of smarter experiments. Take neurology, for example:
I think the convergence of our emerging understanding of neurobiology, genetics (and importantly epigenetics), new models of disease, and neuroimaging/diagnostics provides an exciting foundation for new efforts. Both symptomatic and disease modifying therapies address real unmet needs in neuroscience, and both are benefiting from the accelerating pace of scientific progress. Patient selection and stratification approaches will reduce the noise in trials… So I think it’s a great time for early stage translational research in neuroscience around novel approaches to these big medical problems.
Interestingly, several of the examples that Bruce highlights in his post were born within big pharma!
From our business development/licensing perspective, we have to wonder…
What other treasures are buried within big pharma labs which can be developed (or repurposed) for these areas where unmet needs are high, but big pharma/big VC willingness to invest is low?
What kinds of interesting concepts are sitting in university labs which have no hope of seeing the light of day because the university tech transfer office is contacting “traditional” seed investors?
So, if you have assets in areas that Big Pharma is rejecting, such as neurology, or obesity, or anti-infectives, or heart failure, please tell us about them! We’re especially interested in novel anti-infectives, as the unmet need for novel mechanisms of action is growing alarmingly quickly.
But some of you will be asking, “Where will the money for these huge trials come
from if big pharma is not willing to fund them?”
We think this is asking the wrong question. The reality is that Wall Street-driven multinational pharma companies remain asset-hungry and asset-lite. Their own “unmet needs” for blockbusters remains strong. If there is a promising mechanism of action, with the potential to be first to market, or to displace entrenched competitors that are coming off patent, then the money will be found. It may require a novel spin-out structure, or some other non-traditional financing mechanism, but the money will be there.
The key message from Bruce’s post, in our view, is that as long as the unmet need is there, and as long as that unmet need can be satisfied with a novel approach, then the funding to advance and de-risk that approach will be available.
Money is not the issue. Risk tolerance / management is the issue, and it’s an issue which can be overcome.