Latterell Thinking: Ken Widder, Latterell Venture Partners’ Man in San Diego, on Early Stage Life Sciences Investing
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contract research organizations (CROs) in China or India to carry out pre-clinical research, Widder says that generally hasn’t been necessary at Latterell’s portfolio companies. On the other hand, he says Femta is basically a two-person company developing antibody therapeutics, and Evoke and Meritage are also operating as virtual biotechs. He says the biotechs in Latterell’s portfolio generally had their research data and were ready to move into clinical trials when the firm made its first investment.
—Most of the life sciences companies backed by Latterell are leaving the portfolio through M&A deals. “The landscape for IPOs is very different,” Widder says. “I started my first company when I was 28 with investors from Minnesota, two years after Genentech went public. Investors were wide-eyed with optimism about cloning, and you could go public just by filing an IND [investigational new drug application]. Now you can’t go public unless you’ve got several compounds in phase 3 trials. The bar is much higher, and the sophistication among investors is much greater. There are analysts on Wall Street who totally understand drug development—even marketing and reimbursement.”
As a result, Widder says most life sciences startups are pursuing strategies that lead eventually to a merger or acquisition. “We’re all kind of in the same boat,” he says. “It’s harder work on the VC side. You have to create value… and everybody wants a deal. On the management side, it’s always tough to get good management. But even with good management, there’s a lot of luck that still needs to happen.”