Dancing with the bear, biotechs take cautious steps forward
No one likes dancing with the bear, but for the moment it is still the bears who are leading the dance in biotech.
Throughout the panel discussions and workshops at BIO-Europe Spring® 2009 in Milan, biotech companies agreed no one needed another doom and gloom meeting about the current market conditions, and conference participants seemed to bravely put an accent on the positive.
Nevertheless, there was a grim consensus that no one would be able to return to traditional markets for financing for at least the next two years.
Yet there was also a collective agreement to ‘soldier on,’ perhaps best expressed by Dr. Regina Hodits, Partner at Atlas Venture, during a session she led on ‘Alternative Financing Sources’.
“What really does really help is to look at the problems that are out there and start to find new ways to solve them,” she said. Not all problems are on the shoulders of small biotechs trying to carry companies and projects forward across a desolate financing landscape.
In several sessions big pharma executives were asked if the famous ‘patent cliff’ has gone away, that sudden drop when over 60 percent of pharmaceutical revenues will disappear in a single year as patents expire in 2012. This dynamic has driven stock valuations and the risk of developing new molecule entities for many years.
“Yes, it continues to motivate us,” acknowledged Pamela Demain, Executive Director, Corporate Licensing, Merck & Co. during an afternoon session entitled, ‘The Shakeout, Surviving the Complexities of a Changing Market.’
“And yes, we are continuing to fill our pipeline,” Demain said, adding that Merck’s group for basic research has an objective to supply 25 percent of the early stage clinical pipeline through external partnering activities.
Dr. Rob Wills, VP for Alliance Management in the Pharmaceuticals Group at Johnson & Johnson said there is even a silver lining for small biotechs in this looming problem for big pharma.
“We see the patent cliff coming and we have had a lot of meetings about it, yet it is still coming. This is all good news for partnering,” he said.
Dr. Wills further suggested that small biotechs might have little sympathy for the devil that they see in a big pharma that is not riding to their rescue.
“Big pharma in this environment is facing enormous pressures as well,” he said. “People wonder how there can be pressure on a cash rich company running at USD 60 billion a year, but it is tough right now on a P&L that is run in strict adherence to requirements of stakeholders, like the markets.”
“We are also seeking creative deals with partners and seeking alternative mechanisms to get what we need,” he said.
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