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Between a Rock and a Hard Place—JP Morgan Afterthoughts


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very rich clinical pipelines and thus to a fairly radical reversal in the scouting efforts of pharma. “Clinical proof-of-concept,” typically a phase 2a compound—that was the going refrain biotech heard over the last 3 years or so. But now, with their clinical pipelines filled, pharma increasingly (and eerily univocally!) calls for innovative, disruptive preclinical assets and bona fide product platforms. No surprise that this is leaving an increasing number of biotech CEOs and investors who have followed the “clinical-proof-of-concept” call scratch their heads.

—On the positive side, the healthcare industry has shown nimbleness in building and running new ventures. The quality bar for real differentiation and overall innovation has risen, and luckily, deal flow has not shrunken in view of those higher standards. There’s a steady stream of great ideas and fascinating science. Startup teams are much more attuned to cost efficiency and early go/no-go milestones. They have learned to engage and manage external resources delivering good quality results. Virtual or semi-virtual setups are becoming the norm for early startups rather than wet labs and expensive infrastructures.

So, where does this new world leave venture investors like me? Between a rock and a hard place! I can see novel, potentially breakthrough science aplenty. I can find management teams who can stretch a dollar further than in the past. I have better and more open-minded access to therapeutic area leaders and decision makers in pharma. On the other hand, VC investors have large legacy portfolios of clinical-stage companies looking increasingly desperate for cash to continue development of their assets, or for M&A transactions which enable VCs to exit their investments. And that part has not become easier.

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