StemCells funding: committing to maintain investment to continue the momentum

Edward Tenhoff, MD and Senior Research Analyst at Piper Jaffray & Co. facilitated a panel discussion last week at the World Stem Cells & Regenerative Medicine Congress on stem cell funding

The panellists included:

  • Greg Bonfiglio (Proteus Venture Partners)
  • Cathy Prescott (Biolatris)
  • Shosh Merchav (Teva Global Branded Products)
  • George Emont (Triathalon Medical Ventures)

Edward lifted the hood and analysed general investment trends, looking at a large survey of government and the financial industry.  What are the top 5 barriers to investment?  Analysis shows that perceived barriers actually vary according to investor group: for some, for example, IP was important, to others less so (VCs didn’t seem too bothered).  While governments have invested in tissue engineering and regenerative medicine, public and private investment tends to be more recent arrivals.  Excellent data and insight, such as how well a company deals with a crisis can actually encourage investors.  And a great overture to the panel discussion on maintaining investment.

George Emon set out a key investment principle: never invest alone.  Finding an investment partner is essential.

Cathy Prescott said: No doubt that it’s really tough.  At this stage, we don’t fit with classic VC.  So we need larger organisations such as Teva to drive confidence. Translation centres, such as the UK catapult centres, will play a key role in levering investment.

Shosh stated: one thereby must reach unmet medical need, 2 niche 3 blockbuster

Greg echoed everyone else!  Collective wisdom: it takes 8 “touches” to raise money.  Also, the say you close round A, you should be thinking about round B.  Meantime, you focus on value creation.

The panel considered the value of IP, which proved controversial. VCs in Edward Tenhoff’s survey had not put IP at the head of their shopping lists.  Cathy referred to the Brüstle case.  She referred to a meeting at the Wellcome Trust following the decision, in which the “disaster” scenario proposed by Austin Smith and others was contrasted with the harpoon in the foot “opportunity” scenario painted by yours truly.  She had simply asked investors for their view: which was that it was bad news.  In fact, as Greg observed, the patent space is becoming ridiculously crowded. Open innovation is, he suggested, imperative. George, however, noted that it would be essential to build a portfolio.  There was also a lively discussion about the importance of know how and its value. An interesting aspect of this arose in a remark by Cathy Prescott. Referring to an increasingly asset-centric investment model, she highlighted the danger of neglecting the value in people.

Next, what about the life science investment nuclear winter? Greg felt that there was a growing interest from investors who had kept clear for some time.  George looked at the life science sector as a whole, which had been badly affected over the last few years. However, recently corporate VCs have become more active, while more conventional VC are looking for pipelines.

Are we emerging from the nuclear winter?  Greg was cautiously optimistic. Cathy was cautious, emphasising that investment decisions are made in context with other areas. For example, are investors going to invest in stem cells or social networks?

Check back here in a couple of days for the full presentation.

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