insight into Biotech investment trends

Michael Panaccio, Investment Principal

The biotechnology industry has gone through a challenging few years and we have seen a number of new trends emerge. The most obvious is the venture investors are no longing willing to assume that new investors will be identified in the future to share the capital requirement to take a product to market or to reach a milestone that will enable the sale of the company. New investments fail to complete unless their business plans are “fully funded”. We have seen syndicates that have raised $20 million fall over because they are $5 million short of their $25 million target – something that would not have occurred 5 years ago. Fully funded business plans, strong investment syndicates and “pay to play” have become the norm. However, these syndicates tend to invest in later stage deals and early stage investing has struggled.

It is pleasing to see the emergence of corporate venture investing in biotechnology. In the last two quarters we have seen both Merck and AstraZeneca (through MedImmune) commit funds to corporate venturing – US$600 million in new capital will be a great boost to a biotechnology industry that is starved of capital. The benefits of corporate venturing is not only the capital, but access to advice and guidance from their R&D and corporate activities. We are confident that MedImmune Ventures will be a great investment partner with us in Neuprotect and provide invaluable advice and guidance as the company moves its lead product into the clinic.