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Monthly Archives: January 2013

Recent suggestions that improving IPO activity will lead biotech venture investors to lucrative exits seems to be a bit premature and detached from the reality of these deals. The maxim oft repeated by venture investors has never been truer: IPOs are financing events, not liquidity events. Venture-backed biotechs that are going public are doing so with substantial participation from their venture investors as well as other insiders. This trend is increasing. What’s troubling in all of this is that not only are venture investors not replenishing their war chests through IPOs, they are emptying them because public market investors are unwilling to take on the role of funding the public debuts of these companies without the participation of the venture investors. That means IPOs are failing to generate the returns venture investors need to reinvest in promising new innovative companies. It’s also directing large sums of capital from investors who have traditionally funded early-stage companies into later stage deals where investors see less risk and a faster path to desired returns.

Full details at the Journal of Commercial Biotechnology

Recent suggestions that improving IPO activity will lead biotech venture investors to lucrative exits seems to be a bit premature and detached from the reality of these deals. The maxim oft repeated by venture investors has never been truer: IPOs are financing events, not liquidity events. Venture-backed biotechs that are going public are doing so with substantial participation from their venture investors as well as other insiders. This trend is increasing. What’s troubling in all of this is that not only are venture investors not replenishing their war chests through IPOs, they are emptying them because public market investors are unwilling to take on the role of funding the public debuts of these companies without the participation of the venture investors. That means IPOs are failing to generate the returns venture investors need to reinvest in promising new innovative companies. It’s also directing large sums of capital from investors who have traditionally funded early-stage companies into later stage deals where investors see less risk and a faster path to desired returns.

Full details at the Journal of Commercial Biotechnology

China is the world’s largest producer of crude heparin. In 2007, tainted Chinese crude heparin made its way into the global finished heparin supply chain killing 149 persons in 11 different countries including 81 deaths in the US. While China never formally admitted that it was the source of the tainted heparin, US and European regulatory officials determined that adulterated crude heparin was intentionally introduced (for economic gain) into the Chinese heparin supply and subsequently shipped to other countries for final pharmaceutical formulation. After China was implicated as the source, tainted heparin disappeared from the global heparin supply chain.  This paper reviews the social and economic factors that were likely responsible for the Chinese incident and whether or not another economically-motivated case of crude heparin adulteration is possible in China.

Full details at the Journal of Commercial Biotechnology

China is the world’s largest producer of crude heparin. In 2007, tainted Chinese crude heparin made its way into the global finished heparin supply chain killing 149 persons in 11 different countries including 81 deaths in the US. While China never formally admitted that it was the source of the tainted heparin, US and European regulatory officials determined that adulterated crude heparin was intentionally introduced (for economic gain) into the Chinese heparin supply and subsequently shipped to other countries for final pharmaceutical formulation. After China was implicated as the source, tainted heparin disappeared from the global heparin supply chain.  This paper reviews the social and economic factors that were likely responsible for the Chinese incident and whether or not another economically-motivated case of crude heparin adulteration is possible in China.

Full details at the Journal of Commercial Biotechnology

Government sponsored comparative effectiveness research is the first step towards allowing Uncle Sam to push a restrictive formulary on more and more Americans – with step one in the process being unfettered (and unregulated) communications efforts. Unless we are aware and vigilant, such cost-think may very well lead to a single-payer system referred to in cost-think as “universal coverage” – but in reality will be nothing short of healthcare rationing. There are many dangerous implications, but the most frightening is the chilling effect so-called comparative effectiveness programs will have on the future of healthcare innovation.

Full details at the Journal of Commercial Biotechnology

Government sponsored comparative effectiveness research is the first step towards allowing Uncle Sam to push a restrictive formulary on more and more Americans – with step one in the process being unfettered (and unregulated) communications efforts. Unless we are aware and vigilant, such cost-think may very well lead to a single-payer system referred to in cost-think as “universal coverage” – but in reality will be nothing short of healthcare rationing. There are many dangerous implications, but the most frightening is the chilling effect so-called comparative effectiveness programs will have on the future of healthcare innovation.

Full details at the Journal of Commercial Biotechnology

This paper examines the valuation of biotechnology firms and measure firm value relative to the firms’ drug development pipelines, alliances with other firms, and the varied composition of those firms’ boards of directors.  Unsurprisingly, the advancement of drugs in the pipeline is associated with increased valuation, and the failure of drugs in testing is found to have negative impacts.  Findings do not support the notion that companies engaged in partnerships or alliances have better performance. Extending prior research, the study finds that the presence of medical doctors on the boards of directors is significantly positively associated with the price-to-book ratio and firm value. Drug approvals seemed less likely for small cap firms; this outcome is likely the result of small cap firms with more promising prospects being acquired, and exiting “small cap” status. Among other findings, a higher number of drug approvals among such targeted diseases as AIDS and cancer are observed; modestly higher approval rates are observed in concert with a relatively higher proportion of financiers – such as hedge fund managers and investment bankers – on biotechnology boards.  Findings are important to the investor, the biotechnology manager and the regulator.

Full details at the Journal of Commercial Biotechnology

This paper examines the valuation of biotechnology firms and measure firm value relative to the firms’ drug development pipelines, alliances with other firms, and the varied composition of those firms’ boards of directors.  Unsurprisingly, the advancement of drugs in the pipeline is associated with increased valuation, and the failure of drugs in testing is found to have negative impacts.  Findings do not support the notion that companies engaged in partnerships or alliances have better performance. Extending prior research, the study finds that the presence of medical doctors on the boards of directors is significantly positively associated with the price-to-book ratio and firm value. Drug approvals seemed less likely for small cap firms; this outcome is likely the result of small cap firms with more promising prospects being acquired, and exiting “small cap” status. Among other findings, a higher number of drug approvals among such targeted diseases as AIDS and cancer are observed; modestly higher approval rates are observed in concert with a relatively higher proportion of financiers – such as hedge fund managers and investment bankers – on biotechnology boards.  Findings are important to the investor, the biotechnology manager and the regulator.

Full details at the Journal of Commercial Biotechnology

All stake-holders in the pharmaceutical industry recognise that valuable new medicines can be obtained from investing in the research and development of new uses for existing drugs.  The present system of awarding second medical use patents to originators which develop new and inventive medicines from known drugs does not provide sufficient incentive to this part of the industry.  Moreover the status of second medical use patents is so uncertain that generics do not know where they stand.  A solution which provides proper protection to second medical use patents is required to bring certainty and fairness to all involved in the industry to the ultimate benefit of patients. Full details at the Journal of Commercial Biotechnology

All stake-holders in the pharmaceutical industry recognise that valuable new medicines can be obtained from investing in the research and development of new uses for existing drugs.  The present system of awarding second medical use patents to originators which develop new and inventive medicines from known drugs does not provide sufficient incentive to this part of the industry.  Moreover the status of second medical use patents is so uncertain that generics do not know where they stand.  A solution which provides proper protection to second medical use patents is required to bring certainty and fairness to all involved in the industry to the ultimate benefit of patients. Full details at the Journal of Commercial Biotechnology