Year in Review – 2011

As 2011 draws to a close, here are a few thoughts on 2011 and 2012:

Uncertainty – If there is one word that captures the mood of the year, it is uncertainty . It is very difficult to predict the next series of events that can impact our industry, i.e., events in Europe, liquidity for venture capital, talent shifting from West to East, etc. Many of our life science clients experienced difficulties making decisions because either they or their audiences (i.e., prospective licensing partners) were being affected by uncertainty. Now whether or not this uncertainty was real or imagined is a different issue. However, it is there, it will continue to be there for the foreseeable future, and we will all have to deal with it.

Creativity – The days of life science companies with Phase I data supporting a $100 million pre-IPO valuation are gone. Many biotech companies are struggling to find the investments or partnerships necessary to advance their assets through development, especially clinical trials. At Lacerta Bio, our challenge is to find creative, non-traditional ways to advance their assets through alternative corporate structures, ex-US partnerships, and even divestment of follow-on assets and technologies. This means that companies in 2012 will have to think a bit more creatively about a) how they currently manage their BD processes, and b) how they can use external support to accelerate or compliment their efforts.

Optimism – The upcoming JP Morgan Healthcare conference in January will give us our first read on the mood for 2012. January is usually an optimistic month to begin with. So we expect the mood to be cautiously optimistic, as it was at the last conference. Our sense is that many in our industry will have a “It can’t get worse, can it?” attitude for 2012. The realities may be different, however, as the megatrends affecting biotech & life science companies do not appear to be changing any time soon.

Outlook for 2012 – We don’t foresee sudden, dramatic changes in 2012, with the possible exception of continued trouble stemming from the European debt crisis. In addition to Europe, stock market and investor uncertainty will likely continue. Clinical trials will not become any cheaper nor easier, and financing these trials will continue to be a challenge.

Regardless, our guarded optimism stance is driven by a) recognition of the challenges, and b) recognition that traditional answers and approaches may be ill-suited for the challenges the entire life science industry faces. To this end, pharmaceutical companies and biotech companies both large and small will have to continue adjusting their business models in 2012 in order to meet these challenges.