Biotech is riding the crest of a wave of public and private financial interest unparalleled in the 36-years since the founding of Genentech. Since 2012 public markets have committed $10.3 billion to more than 100 life-sciences IPOs, an industry record. Pharma has been buying/partnering with biotech on an unprecedented scale. Research breakthroughs from cancer immunotherapy to wearable IT to real-time genomics are generating new business opportunities undreamed of a decade ago. Old technologies like gene therapy and RNAi are showing signs of finally achieving commercial relevance. Demand in the form of unmet medical needs is intense. Led by J&J’s Innovation Centers, pharma has suddenly shown an interest in stimulating external discovery/early development. Research continues to generate new hypotheses and targets at such a prodigious rate that commercial development falls further behind every day. The entrepreneurial community overflows with talent from the growth of biotech and the contraction of pharma. As the CEO of one of my portfolio companies once described the challenges he faced, “We are surrounded by insurmountable opportunity.”
It is easy to get carried away when the Fed has filled the money punch bowl to overflowing, the party is on, and BIO is coming to town. We are on the threshold of a new era in biotechnology. What could go wrong?
Well, for starters, when we sober up, we will still be in the pharmaceutical development business—where most things go wrong.
So what is new in an industry that lives perpetually on the threshold of a new era? What is different this time?
It is not the fanfare on Wall Street. We have been there before in 2000 and to a lesser extent in 1995-‘96 and 1990-‘91, and several times before that. Windows always close when the Fed takes away the punchbowl. Today, Janet Yellen seems bent on maintaining markets in a state of permanent inebriation, a strategy untested at this scale, but one that … Next Page »