BayBio: Impact of US Presidential Elections on Biotech




Episode Loading...




PharmaTelevision requires Javascript enabled and Adobe Flash Player to watch our programmes. If you do not have Flash installed, you can download it for free from the Adobe Flash homepage.

Improve your Internet experience and start watching exciting new video content.

Video title: BayBio: Impact of US Presidential Elections on Biotech
Released on: February 01, 2008. © PharmaVentures Ltd
Share/save this page:
Email
Bookmark
Facebook
Twitter
LinkedIn
Follow us:
RSS
Twitter
  • Summary
  • Transcript
  • Participants
  • Company
In this exclusive interview - filmed at the JP Morgan conference in San Francisco - Fintan Walton and Matt Gardner, President and CEO of BayBio, look back on 2007, beginning with Matt Gardner’s assessment of the biotech industry for the past year. Matt mentions the benchmarks that are used to quantify the state of the industry - which includes the status of the product pipelines of biotech companies. The interview moves on to discuss the key issues facing the biotech industry in light of the run-up to the 2008 US presidential elections. Matt talks about the major issues that one needs to be aware of with regard to the individual presidential candidates. These include their views on healthcare and on patent reform, and Matt says why he thinks the outcome of the patent reform debate is the most sensitive issue. The interview progresses towards examining the decline in venture funding of early-stage and seed companies - and how this may result in a future company ‘gap’. Personalised medicine, and its potential for eventually lowering the cost of healthcare is discussed. The interview concludes with Matt’s optimistic outlook for the industry.
Matt Gardner's assessment of the biotech industry for the past year.
Fintan Walton:
Welcome to PharmaVentures Business Review brought to you by PharmaTelevision the world's first on demand pharmaceutical television channel. We are here in San Francisco recording a series of interviews at the annual JP Morgan Conference. This conference was originally run by the famous Hambrecht and Quist Bank and is one of the oldest events in biotechnology. Today thousands to send from around the US but also from around the world into San Francisco to do financial deals and recently it's also become an important partnering event. I hope you'll enjoy the series of interviews we've done from some of the key companies attending this conference. Hello and welcome to PharmaVentures Business Review here in San Francisco. On this show I've Matt Gardner, who is President and CEO of BayBio the local organization for biotechnology companies here in the Bay area, welcome to the show Matt Gardner.
Matt Gardner:
Thanks Fintan, it's great to be with you again.
Fintan Walton:
Yes, well you said again because last year you were here and we were talking about what's gonna happen in 2007 so for you and your organization and your members has 2007 been a good year or bad year?
Matt Gardner:
That's been a fantastic year there was a couple of primary bench marks we use to take a look at that one is the state of the pipeline and the second might be the state of investment in the industry on a whole and both are at relative highs and in venture investment we see an all time high other than the year 2000 so in every sense it was a bang up year.
Fintan Walton:
You are about to launch your impact report which you do every year which looks at what's happened in 2007 where you see things going in 2008 and you talk about your pipeline, the pipeline being those companies that are based here in the BayBio area which is basically North California the Northern California?
Matt Gardner:
Right.
Fintan Walton:
The pipeline has increased by 25% you say is that correct?
Matt Gardner:
That's right exactly in fact we take a close look at everything that's been approved, all products that have been approved out of the Bay area as well as products that are in Phase II and Phase III and what we can see there is that Phase II, Phase III part of the equation is up from last year to 492 products that's up over 400 from the previous year and so that's a fantastic measure to us that companies are investing heavily in that part of the pipeline.
Fintan Walton:
You also mentioned the increased funding going into biotechnology, how you are measuring that, that's just based on companies new financings or are they mainly associated with existing companies in additional rounds of financing?
Matt Gardner:
Yes, well thanks to some excellent data from a number of the big accounting firms and some of the banks that you can get really a close look at not only the IPO level but then private equity as well. So combination of things put last year over 20 billion in financings in the US for biotech's, so that's a combination of IPO's partnering and venture money. But locally here we saw not only all time high's other than 2000 in venture investing we saw an unusual amount of partnering activity as a source of funding as well, so companies have clearly got more creative for where they are looking for dollars to finance their pipeline.
The key issues facing the biotech industry in light of 2008 US presidential elections.
Fintan Walton:
It's good to hear of the success stories continuing in the biotech area there are still challenges clearly and in 2008 where we are now it's Presidential election year and when Presidential elections occur here in the US public awareness of issues particularly around medicare and healthcare and so forth elevate, what are the key issues that you see facing the biotech industry as this Presidential election unfolds in 2008?
Matt Gardner:
Sure I think we've got the potential for what might be the perfect storm for our industry that Washington's view of biotech is pivotal enough that the Presidential candidate may make a world of difference to our fate in the US. So I think there are probably three major issues to watch as the platforms of each of these candidates unfolds one is their view federal funding for research that we've seen that not only flatten out but actually decline a bit in the last couple of years and we've heard from one of the republican candidates that some funding for research should be cut further and so that's a really concern. Two is their view of their healthcare reform debate and obviously you would hear from most in the industry that they think access is the fundamental question, so getting folks quality access to healthcare is critical and virtually no one in the industry is going to disagree with that and I think that's a principle that we can also get together on, it's the other questions about the healthcare reform debate that I think require great deal of compromise from the parties that are involved. And then the third question is where we are headed with patent reform which is going to back on the Senate floor here in the spring and the versions that have circulated in the house in senate of patent reform do carry some risks for changing the way that we do business.
Fintan Walton:
You're very close obviously in your role to the entrepreneurs the people who are actually creating the biotech industry here in the San Francisco area and Northern California area these issues that are coming up through the Presidential elections obviously there are issues that the public can see but how does that affect and what fears do you have that some of these things will actually result in a negative have a negative effect on our industry here in the Northern California area?
Matt Gardner:
That's a great question, I think the most sensitive of those issues is probably the patent reform question and the way that patent reform ultimately comes out of congress that has the greatest potential to have an immediate harmful effect on the way biotech has always done business, most of these early stage companies are most sensitive to a confidence in consistent treatment of IP and the way that the patent reform package has been written today it would draw a whole host of things into question including the amount of time that any form of opposition could challenge a patent that a company holds and so that would create a tremendous amount of uncertainty around biotech's that are incredibly sensitive to each individual patent that they hold especially in that start up phase when you are most sensitive and vulnerable.
Decline in venture investments in early-stage and seed companies and how this may result in a future funding gaps.
Fintan Walton:
Right. The other one which I would probably suggest is an additional one is the issue of funding of public research, publically funded research coming from government and we are not just in have funding of NIH and so forth's occurring, but also on the government grants are available for enterprises?
Matt Gardner:
Yes, I think that's a great point too I think we are looking at a time that's a really unique period in history for funding science, we've experienced a doubling of the NIH budget as you've suggested, we've hit a point with that that it's a very healthy amount and in fact that has flatten off little bit should be of concern but certainly we've found that there are other sources of funding available as these enterprises grow and so we see programs that are just not available at all to biotech so for instance there is a SBIR grant program in US that is not available to venture backed biotech companies and that just doesn't make sense, it was not the intent of the policy at all it only requires a technical change in the language but unfortunately the change just hasn't been made on to.
Fintan Walton:
And funding gaps these leads to funding gaps basically for enterprises?
Matt Gardner:
Yes, in essence the financing situation is that so much money has come into the pool that even venture funds have moved into the billions of dollars and that means that they are funding later and later stage larger enterprises even with venture money, so we commonly see now 100 million dollar rounds of venture investment in the series C which is sort of a start up if you will. That means that the amount of money available for seed and early stage investment has dropped way back as a percentage of the total, it's just not worthwhile for many of those venture funds to make a $5 million investment on it causes them the same amount of time and energy to administer a $50 million investment, so that potentially creates accompanied gap five-years from now when we see that the companies that were never funded in this window of time aren't growing up to become the mid caps of tomorrow and so there is real potential threat to the sort of the continuous cycle of renewal in the industry.
Personalized medicine and its potential for lowering the cost of healthcare.
Fintan Walton:
Right, and going on to this the other remaining issue I suppose part of that integrated to that issue is the whole idea of personalized medicine and in another words what we are talking about is early diagnosis of disease potentially and very specific drug therapies for those populations that require it, what's happening here in the BayBio , in the Bay area that's going to change things there?
Matt Gardner:
Yes you are really on something there I think we are just at the beginning of a wave of the arrival of some new technologies that will make personalized medicine a shift and how we calculate healthcare overall and so you are really on to what is just there tip of the sphere and all this technology that's available, so we see a few companies now with some empowered diagnostics that are based on genetic information, it's a first time we've really had that to deploy. That really signals for us some things that we think will be a sea changing in overall healthcare, we think the conversation has to turn now to something different which is that we're actually going to need greater resources to be put into these technologies to prevent the overwhelming growth of unnecessary procedures, surgery, hospitalization that has been a burden on the healthcare system all this time in that sense biotech is finally going to live up to the potential that it always had to actually lower the cost of healthcare.
Fintan Walton:
Right. So is that level of conversation happening or that sort of level of debate happening at the Presidential candidate level?
Matt Gardner:
You know it's not, I think there is an awareness issue there it's something that holds promise and I think a lot of people have always understood that biotech has this promise associated with it but it's not something that we are seeing well understood in the current debate and I think in that sense it has to be reframed around these ideas about prevention and early diagnosis and understanding the individual nature of healthcare, and so there is a period of time here where this is so new that we've got to go through a familiarization process for everyone involved in the current healthcare system but it's not going to be long for an entire wave of those diagnostics is available and in use in healthcare and so those first companies to arrive have faced the real challenge talking to reimbursement organizations and the federal government about how their technologies work. And the way that the biocracy has shaped today it's looking at replacement dollars rather than prevention dollars and so it's a real challenge to how to do business.
Matt Gardner's optimistic outlook for the biotech industry.
Fintan Walton:
Right well the good thing about biotechnology it's always innovative it's always changing so these issues are challenges for even Presidential candidates they've got to catch up with the technologies what we can and cannot do but one final question for you Matt Gardner, looking back at 2007 which we've just done and looking into 2008 do you remain optimistic for the biotech industry?
Matt Gardner:
I do. I think one of the things that we were seeing now is that greater number of deals are being had with not only the large pharma partners but also biotech to biotech and one of the things that signals I think is that everything is in play and I think that signals a really good time to come in terms of getting these products through to the patient that there is greater commitment than ever from our sisters in big pharma to come and find these very promising technologies and pull them through the system. So I think that works very well and may be in the end game there are fewer number of companies that are sort of free standing but at the end it will be a greater investment in the technology.
Fintan Walton:
Matt Gardner, President and CEO of BayBio thanks a lot for telling us all about what's happening here in the Bay area. Thank you very much indeed.
Matt Gardner:
Thanks Fintan Walton.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Matt Gardner
CEO
Matt Gardner is President and CEO of BayBio . Mr. Matt Gardner oversees the company's activities in advocacy, industry advancement, membership benefits and communications. He has contributed content to a broad range of publications, from biotechnology articles in Manufacturing Today and Helix International magazines, to white papers on enterprise development and innovation policy. Mr. Matt Gardner previously held the position of Director of the Maryland Bioscience Alliance, in Rockville, Maryland. There, he was responsible for serving the Mid-Atlantic bioscience community. Before working for the Bioscience Alliance, he was the North American Director of Business Development for the Government of Queensland, Australia, which included responsibility for biotechnology initiatives. While serving Queensland, he founded and chaired of the Queensland-United States Bioscience Business Council. He was a member of the founding Global Board of Advisors for the Patent and License Exchange and was a charter member of the LA Morning Rotary Club serving downtown Los Angeles, California. Matt earned his Bachelor of Arts in Political Science and his Master of Arts in History, both from the University of San Diego.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.
BayBio
BayBio is Northern California's life sciences association, and supports the regional bioscience community through advocacy, enterprise support and the enhancement of research collaboration. BayBio members include organizations engaged in, or supportive of, research, development and commercialization of life sciences technologies.