What are venture capitalists looking for from the biotech and pharma space?
It is fair to say that the biotech market is having a challenging time. Much has been written about the lack of M&A activity, disappointing stock performances and the closing of the IPO window as those companies that have managed to get away find themselves sinking fast. For those looking at that set of data, things can indeed look a little bleak. In fact, Wall Street more widely has become a bear market in the last week or so, so pharma is not alone, but that might be cold comfort for many.
I view the market while wearing my venture capital hat, however, and I firmly believe there are still reasons for positivity. At a foundational level, there is still plenty of VC and private money splashing about and plenty of interest from VC firms in seeking out the right biotech investments. A correction may not be a bad thing for the market, and for VCs it may be useful to help identify the best investments given some of the concerns about the quality of businesses floating over recent years. In my opinion, the public markets are heavily influenced by the macro dynamics both politically and economically. It is another cycle in the markets which is a storm that everyone has to weather, and private funding might help shield from that storm.
For VCs looking to invest in biotech, it’s all about due diligence. Possibly obvious, but in a market where the risks and rewards are so high, its importance can’t be overstated. This will be one of the main messages I’ll be sharing when I join Cem Baydar and Paul Verdin in Evaluate’s webinar next week. We’ll look at the overall state of the market – noting that the long term future still looks positive, despite the current challenges. And I’ll be chatting with Cem about some of the big scientific, clinical and commercial questions that VCs need to ask to ensure they make the right investment decisions.
For biotechs seeking investment, I’m hoping this will also give good insight into the areas to focus on when you’re working to attract investment. As well as my VC role, I’m also the CEO of a UK-based biotech, Stablepharma, so I will be bringing all my hats into the ring for this conversation! For example, we’ll discuss:
- Is this asset truly differentiated, and how likely is it to hit key milestones and progress through R&D?
- What is the realistic total addressable and obtainable market for a new opportunity?
- How is the clinical utility of assets I’m invested in changing in the face of emerging competition?
We’ll cover a lot more, of course, and I am really looking forward to chatting with Cem and Paul about some of the approaches I use to help appraise new investment opportunities and assess current portfolios. Obviously there is far too much to talk about for us to cover everything in 40 minutes or so, but we plan to give it a good try!
