nature@BIO 2007

After no sleep on the red-eye and a quick shower to freshen up, I had six meetings that pretty much had me hoppin' around the conference center straight up to 5 o'clock, when I rendezvoused with my business development team and headed to the BiogenIdec cocktail reception.

Over cocktails, the bus dev team filled me in on their seven meetings, some of which hold real promise to either help us achieve our screening revenue goals for this year or turn into more valuable collaborations. The kick I got out of the bus dev team's enthusiasm gave me the adrenaline rush I needed to shake the sleepiness that was gripping me and drive on through an hour or so of networking (bus dev execs from BiogenIdec, MedImmune, BMS, biotech colleagues and venture folks) followed by dinner with members of my Board and SAB.

When I finally got back to the hotel room at midnight, sleep came quickly... Then up at 6:30 for a quick workout before what I expected (at least according to the calendar!) to be a light day of four meetings and a panel discussion, followed by more receptions.

So much for expectations!!!

Between lengthy phone calls back to the office (hey, still got a business back in San Diego to run!), last-minute preparations for a Board meeting on Wednesday, running into "must-talk-to" people and staying on the existing meeting schedule, I barely had 15 minutes to eat at the food court (lesson learned: at a crowded food court, there's no such thing as line arbitrage... A short line means bad food!).

I did, however, have and hour in the afternoon to walk the convention floor. Amazing! I don't consider myself old, but I do remember a time when the booths at BIO's annual meeting were much, much less impressive and numerous!! Most amazing thing: Innovive's disposable animal caging systems. Best treat: Canada had a Tim Horton's serving up hot coffee and great donuts!!

Panel was fun. A way for some of us to share our experiences raising VC money to fund startups and perhaps help a new generation of entrepreneurs avoid the mistakes we made!!!!

Then on to two great receptions close by and on the water: Cooley Godward Kronish's and the swanky Novartis/MPM/Atlas reception at the Contemporary Art Museum. Again lots of networking with VCs, pharma folks and biotech colleagues. There's no other event on the annual biotech calendar that is as valuable from a schmoozing standpoint. JPMorgan in January is a distant second...

I invited a couple partners from Cooley, a few fellow CEOs, a banker, and a pharma bus dev exec to dinner. While waiting for cabs, the group grows to 12, and we ultimately descend on the restaurant with a force of 20. Great time. Who knew that Ron Cohen, Acorda's CEO, was such a crooner? Backed up quite ably by Ken Moch, former CEO now banker, Cohen serenaded the table with show tunes and doo-wop.

On to bed... Almost 1 a.m!! And worse yet, I have a 4:45 a.m. wakeup call to catch the 7:00 shuttle to LaGuardia for a 10:00 due diligence meeting.

Next year in San Diego, I vow to sleep more during BIO. We'll see....

-- Scott Salka, CEO, Ambit Biosciences

Posted by Brady Huggett on May 11, 2007
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Freelance science writer Jim Kling reports:

At a Tuesday afternoon session on biotechnology in aquaculture, a representative from HQ Sustainable Maritime Industries described a decidedly non-biotech method for raising exclusively male tilapia fish.

The females carry their eggs in their mouths and so aren't as productive as males. One approach to ensuring that you only raise males is to use hormones. HQ took a different approach. It added to the ponds a predator fish that grows at the same rate as male tilapia. It ate the slower-growing females as well as runts. It's an example of Biomimicry; taking inspiration from nature.

Another presenter pointed out that humans continue to be hunter/gatherers with respect to one protein source -- fish. Interesting point, I thought. Why is that we've embraced farming everywhere but the ocean?

Posted by Michael Francisco on May 10, 2007
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Freelancer Barbara Nasto reports from the Finance track:

During the Tuesday morning session “On Becoming a Public Company,” Annette Grimaldi, head of life sciences investment banking for New York-based Jeffries and Co., described the ideal biotech IPO candidate. Desirable characteristics included a late-stage novel product that addresses an unmet clinical need, a large market for that novel product to which the company retains all rights, cash in the bank and clearly defined interim milestone goals. Grimaldi also mentioned that such a company does not exist. Her advice for biotechs considering an IPO? "Have a clear sense of self and have the story down before you enter the market. Be able to define what you are and what you want to be when you grow up. Also consider how to create value for the investors.”

The session included other interesting perspectives from operational and legal and execs with first-hand IPO experience. Regarding timing, “You have to do it [hold the IPO] when you don't have to do it," according to Affymax CEO Arlene Morris. Laura Berezin, an attorney with Cooley Godward, advises companies to start socializing early, and getting free advice from lawyers and bankers. In addition, “Have a complete management team. Though you may be tempted to cut corners on this, it’s important to be staffed up well ahead of the IPO." Finally, Michael Lytton, a general partner with Oxford Bioscience Partners, stressed the importance of retaining some of your commercial rights even after your company has been sold.

Posted by Michael Francisco on May 10, 2007
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Be afraid. Be very afraid. The PDUFA Reauthorization Bill gives the FDA authority never before enjoyed.

At Wednesday's session "Drug Safety and PDUFA IV: Overview of Critical Issues in Congress", BIO's VP for government relations, Brent Del Monte, outlined a few "concerns" (his word) with the legislation (Senate Bill S.1082). Consider: this is the first time that economics is entering an equation (Historically the FDA has been concerned with safety and efficacy). A provision of PDUFA IV limits the period of market exclusivity of certain drugs to three months when sales exceed $1 billion. This is also the first time, according to Del Monte, that Congress is going in and making changes to the agreement. And the first time that user fees have been increased by Congress, which, by the way, under the new legislation will account for 70% of the FDA budget for drug approvals -- up from 50%.

But on the plus side, an amendment allowing the sale of baby turtles treated with proven methods for Salmonell has been introduced. Don't ask me why.

Posted by Laura De Francesco on May 10, 2007
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With M&A activity as prevalent as it has been, there's a lot of talk about just how companies should position themselves. By that, I mean should young companies grow with an eye on a buyout? Prepare to try the public markets? Both?

The answer, of course, is to grow the company as if none of this matters -- simply building value is the one way to set a company up for either end, or to go it alone. Still, it's hard for a small biotech to ignore what's happening to its brethren and not ponder what's next.

BIO has any number of panel discussions devoted to this topic, or some variation of. In a session this morning, Phil Taub, from law firm Nixon Peabody, displayed to a full audience data on buyouts of public companies in the biotech sector. In 2005, pharma bought 8 public life science firms for a total value of $13B, at an average premium of 38 percent. Biotechs that year bought 10 public firms, costing $6.9B, at an average premium of 37 percent. But things were even better last year for those being bought. In 2006, pharma bought 15 public life science firms for $16.2B at an average premium of 58 percent. Biotech companies bought 17 firms for a total of $8.9B at an average premium of 55 percent.

It's early, but this year things have continued apace. AstraZeneca is buying MedImmune for $15.6B, at a price of $58 per share. While that is a 21 percent premium to MedImmune's close the previous trading day, the stock had been running up for weeks in anticipation of the sale -- the company's trading price was just less than $32 at the end of February. Analysts had predicted the company might garner a $45 share price, so $58 per share suggests that either AZ valued MedImmune a lot differently than the analysts, or that the bidding for MedImmune behind the scenes was particularly fierce. Panicked might be a good word.

For MedImmune shareholders, it's great. And it's been great for a long list of biotechs purchased in the last couple of years. And every company I just mentioned is a public firm, but it begs the question of whether the industry is sitting on an M&A pricing bubble that could change the M&A/IPO debate for private firms. If so, does it matter? Of course -- when that bubble bursts, no one wants to be on the block and getting valued at less than the paltry amounts the public markets are providing today. But there's also really nothing to be done about it. So, ride the wave while it lasts.

Posted by Brady Huggett on May 09, 2007
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BIO has definitely become an extraordinary convention event. For many years I've been walking the hallways of ASCO, and I feel that BIO has no reason to envy the top scientific meetings that take place every year in the US. The vibrant entrepreneurial spirit, the eagerness to partner and establish genuine dialog, plus the willingness to explore outside-the-box strategies and organizational alliances makes this international conference very unique.

During the CEO Forum I had the opportunity to hear Mark McClellan and Alan Garber speak about value-based pricing and the future of biotechnology companies. It was an insightful roundtable with a very outspoken audience. One of the topics discussed by the panelists was the issue of moving to value-based pricing strategies. That is, strategies that measure and pay for the net impact of a drug on the population rather than a model based on a pill-by-pill payment. In other words, only those who benefit from a drug are the ones expected to pay.

A company representative asked: How do you measure the cost of failure so frequent in clinical development?

A biotechnology CEO added: Time is the most expensive aspect of our business, even more so than direct costs. Any delay in rewarding the research and development output may have serious consequences on innovation. How can you manage that?

Whether value-based pricing provides a better health economic framework or a greater risk for innovation will continue to be a challenging debate. In the meantime, seeing policymakers participating actively in the discussion makes me feel that the contribution of biotechnology to the present and future health of the world is significant and undeniable. Congratulations to all the researchers and leaders that are making possible the miracle of innovation.

-- Edmundo Muniz, president and CEO, Tigris Pharmaceuticals

Posted by Brady Huggett on May 09, 2007
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This is making headlines across the country this morning. Many are comparing Massachusetts’s proposed $1 billion life sciences initiative to California's $3 billion for stem cell research, although the Massachusetts plan (announced yesterday at BIO by Governor Deval Patrick) is a lot more than just a stem cell plan. Here's how the Boston Globe describes it today:

Over 10 years, the state would issue $500 million in bonds to pay for capital investments at public institutions and other facilities. It would also spend $25 million a year on direct research grants and offer $25 million annually in tax credits to biotech companies that promise to create jobs in Massachusetts.

The administration, however, has not determined how much money would be dedicated to different areas of research or how much would be available to the private sector.

So it's not clear yet how much of that money would be for stem cell research. But overall, it's meant to make up for the shortfall in NIH funding and spur more commercialization of research.

In addition to the $1 billion in state funding, the plan calls for $250 million in matching funds from the private sector.

Part of the proposal includes the establishment of the Massachusetts Stem Cell Bank, estimated to cost $66 million. The Globe said eight MA hospitals and universities, including Harvard, have already pledged to deposit their stem cell lines. The goal is to make this stem cell bank the biggest in the world. UMass Worcester would receive $38 million for a new RNA interference research center, headed up by Nobel Laureate Craig Mello. (For more details, see here.)

Posted by Corie Lok on May 09, 2007
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Energy seems to be one of the major themes here at BIO: biofuels like biodiesel and ethanol from corn and cellulose.

I went to one very full session this morning about all the other industrial chemicals, beyond ethanol, that can be made from biological, renewable sources: propylene glycol (used in a wide range of foods, cosmetics and other products), acrylic acid (used in plastics manufacture), butanol (a potential fuel) and many others.

Cargill, the food and agriculture giant moving into doing more industrial chemicals, announced today that it, in collaboration with Ashland, a chemical and petroleum company, is building a new plant to produce propylene glycol from glycerin, a byproduct of biodiesel production. As more biodiesel is being made, the companies are expecting a glut of glyerin on the market. So it's interesting to see that as a few chemical companies slowly move towards nonpetroleum-based products, it's spawning the production of more chemicals from these "green" sources.

One French company, Metabolic Explorer, was making the case for butanol as a more efficient source of energy than ethanol that can replace diesel and be added to gasoline, though the cost is still too high.

One thing that wasn't discussed was the benefits of nonpetroleum sources for carbon emissions and climate change. Because in the end, that's what really matters, doesn't it?

My colleague Brady Huggett attended the same session and gave a business perspective (I think we posted at the same time!).

Posted by Corie Lok on May 08, 2007
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Among the attendees not dressed in "business casual" were these Canadian Mounties seen roaming the cavernous exhibit hall, perhaps in search of their mounts.

More photos after the jump.

Continue reading "In character" »

Posted by Michael Francisco on May 08, 2007
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The public, investors and certainly the biotech industry are fully aware of biofuels, but what else is out there in industrial biotech? BIO scheduled a panel this morning -- it drew more than 200 people, by my estimate -- to discuss just that.

There's a lot, actually. There's the bioplastics market, for one -- Cargill is a leader there. (Producing bioplastics also would cut down on U.S. consumption of petroleum by reducing production of petroplastics, by the way.) There's syngas, and there's also butanol, which as a coating and solvent alone addresses a $3.3B market, although it has an upside of potential use as a biofuel.

As Philippe Guinot, vice president of business development at Metabolic Explorer pointed out at the panel, the chemical applications of industrial biotech address a market as large as ethanol. All of which helped his firm go public earlier this year, raising about €52 million (US$70 million) on Euronext. You can view the press release on the IPO here.

The question is how to get the word out? Without Bush mentioning bioplastics or syngas in a State of the Union address, the public hears industrial biotech and thinks just biofuels.

Posted by Brady Huggett on May 08, 2007
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