How hard has it gotten for life sciences companies to raise capital? Will biotech startups eventually resort to collecting change in hats to raise money? Companies these days are ready to consider a number of different avenues to raise money and move their science toward commercialization—venture capital financings, corporate partnerships, government grants, awards from nonprofits. With a depressed economy slowing down capital formation for many biotechs, the Massachusetts Biotechnology Council appears to be putting all the fundraising options on the table for its membership at its 11th Annual MassBio Investors Forum.
The program for the investor conference, which takes place next week on October 6 in Boston, shows the MBC is open to any combination of financing options for its members. It includes plans for the state’s biotech industry group to share center stage with a UK organization called the Golden Triangle Partnership, which is dedicated to supporting the business needs of British biotech firms, including capital formation. In ordinary times, the UK group would be considered a competitor to the MBC.
For the second year in a row, the biotech council is featuring non-traditional biotech funding sources, such as several disease advocacy groups. Also attending is the National Cancer Institute’s somewhat new Small Business Innovation Research (SBIR) Bridge Award program, which funds more advanced commercial activities than SBIR grants have traditionally supported. Bob Coughlin, president and CEO of the MBC, told me that more business development officials from large pharmaceutical companies are expected to be at the conference than ever before.
Traditional venture firm partners appear to be the minority on the speakers’ list. This reflects the change in how biotech firms are getting funded—especially the brand new firms looking for their first round of financing. While few would argue that the NCI’s new grant program or disease advocates such as the Leukemia & Lymphoma Society could replace the role of venture capital in financing biotechs, venture dollars are generally more difficult to come by than in years past. Accepting that reality means biotechs in the Bay State have had to turn to other types of financing, such as those on the menu at the MBC’s annual investors conference, as their best bet to stay afloat. (This isn’t to say that venture firms aren’t funding early stage biotech startups, but data from the National Venture Capital Association and other sources shows funding levels have fallen well below the level of previous years.)
“Over the last couple of years, the manner in which [biotech] companies achieve necessary capital formation has changed drastically,” Coughlin said, adding that the biotech council has altered the format of its investor conference to reflect the different ways biotechs are raising money.
A headliner at the conference, Harvard Business School professor Gary Pisano, started expounding on the flaws in biotech funding models long before the financial crisis went into overdrive last year, most famously in his 2006 book called “Science Business.” Pisano writes that more integration among institutions such as research universities and life sciences companies could help streamline the way science-based businesses such as biotechs bring products to market.
Perhaps in this spirit of collaboration, the MBC and Golden Triangle Partnership—so named ostensibly because it represents the UK biotech hubs of Cambridge, London, and Oxford—plan to sign a “memorandum of understanding.” Coughlin said that the pact between the MBC and its UK counterpart will provide some shared benefits, such as enabling members to attend each other’s events. For example, at least three of the biotechs that plan to make presentations at the investor forum are UK-based. While the MBC and the Golden Triangle Partnership are trying to foster growth in the biotech sectors in their respective geographies, both groups also appear to see that sharing access to capital and other resources is in their mutual interests.
Here’s a link to the roster of companies that plan pitch investors and other interested people at the investor conference.