Bay Area biomedical firms seek financing options

Finding venture capital increasingly difficult to obtain, biomedical companies in the Bay Area and elsewhere in California are seeking financing through licensing deals, corporate investment funds and patient advocacy groups, according to a survey released Tuesday.
“We’re concerned that capital is harder to get,” said Gail Maderis, CEO of BayBio, a South San Francisco biomedical industry organization that did the survey with PricewaterhouseCoopers and another industry group, the California Healthcare Institute. But based on the survey, she added, “What is interesting to me is how resourceful our companies are in adapting to the changing environment.”
California boasts 2,244 biotechnology, medical device, diagnostic and other biomedical companies, which employ more than 260,000 people, according to a separate report by the three organizations last year. Their latest survey was conducted in November with CEOs at about 100 biomedical companies in the state — many of which were based in the Bay Area. Among the findings:

• Forty-four percent said they intend to seek licensing agreements for their technology and corporate partnerships as a source of financing over the next 12 months, double the number who said they would consider that in a similar survey a year ago.
• Thirty percent said they plan to seek corporate venture financing, where individual businesses — typically large, well-established firms – invest in activities that are often unrelated to their main commercial focus. By contrast, only 10 percent of the CEOs surveyed a year ago said they would tap corporate venture funds.
• Eleven percent said they are considering obtaining financing from foundations and other nongovernmental entities that advocate for patients suffering from various health problems. In last year’s survey, just 4 percent of the CEOs said they intended to seek money from such sources. Even though many early-stage biomedical companies are finding alternatives to venture capital, “the next couple of years could be a very tough time for some of these young companies,” Tracy Lefteroff, a life-sciences partner at PricewaterhouseCoopers, said during a Tuesday meeting in San Francisco where the survey data was released.
  The lack of financing is prompting some biomedical CEOs to consider moving overseas. That includes Stephen Cary, chief executive and co-founder of San Francisco-based Omniox, which among other things is developing a compound to make radiation therapy more effective against cancer.
  He noted at the meeting that a foreign investor recently offered to finance his company’s shift to Asia. But when he has talked to U.S.-based venture capitalists, “they are laughing before you finish your sentence,” because they consider it too risky to finance the years of research it takes to get a biotech product approved for sale.
  Maderis said it is difficult to assess whether biomedical companies overall are better or worse off since last year’s survey. But they seem to be having more problems in at least one area: Seventy-five percent of the CEOs said they have experienced a delay in their research or development projects in the past 12 months. That compares with 69 percent in last year’s survey.
  Of those recently reporting an R&D slowdown, 39 percent blamed the problem on lack of financing. In addition, 80 percent of all the CEOs queried said their growth had been slowed by the U.S. Food and Drug Administration.
  One of the biggest problems is that the federal agency has been demanding more data and longer clinical studies from biomedical companies with drugs under development, Maderis said, adding, “that is slowing the time it takes to get to the point where you can put the product in front of the FDA for approval.”
  Contact Steve Johnson at 408-920-5043.
  
  Pursuing financing options
  Some findings from a survey of biomedical CEOs, which was released Tuesday by BayBio, PricewaterhouseCoopers and the California Healthcare Institute.
  44 percent:
  CEOs who said they intend to seek financing through licensing agreements and corporate partnerships in the next 12 months, up from 22 percent who said that in a survey a year ago.
  30 percent:
  Those who plan to seek corporate venture financing, compared with 10 percent from a year ago.
  11 percent:
  CEOs who are considering financing from patient-oriented foundations and other nongovernmental entities. Just 4 percent considered that option a year ago.

http://tourism9.com/