MAVA Rings Bell to Open NYSE

Congratulations to Julia Spicer and her team at the Mid-Atlantic Venture Association (MAVA) for orchestrating the opportunity to open trading at the New York Stock Exchange. Here are the details...

Leaders from the Mid-Atlantic Venture Association (MAVA) and the entrepreneurial community gathered on the iconic stage above the New York Stock Exchange and rang The Opening BellSM today.

Representatives from MAVA member funds and guests, including Updata Partners, New Enterprise Associates, H.I.G. Ventures, Boulder Ventures, The Carlyle Group, Core Capital Partners, ABS Capital Partners, In-Q-Tel, Paladin Capital Group, Avansis Ventures, The Grosvenor Funds, Montague Newhall Associates, and Safeguard Scientifics and others, attended the bell-ringing and related events at the New York Stock Exchange to promote the vital role of venture capital and private equity in the capital markets and to celebrate MAVA’s more than two decades of leadership in the venture capital industry. In May, the NYSE Euronext was a sponsor of MAVA’s Capital Connection 2008 conference in support of mid-Atlantic venture capitalists and entrepreneurs.

Following the ceremonial bell-ringing, MAVA Board President John Burton, who is also Managing General Partner of Updata Partners, provided a perspective to the viewers of CNBC’s live broadcast from the Exchange, Squawk on the Street.

Burton’s remarks on the broadcast reflected the findings of MAVA’s recent member survey on the current state of the markets as well as highlights from last week’s Mid-Atlantic Bio conference, which boasted record attendance and highlighted the vitality of the global bioscience marketplace.

“The Mid-Atlantic Venture Association has been honored to ring The Opening Bell today. Venture is essential to economic growth, now more than ever as a catalyst for innovation and jobs. We are here at a pivotal time, and there is no question the economy and our industry are facing challenges. But we are seeing that not every fund and every sector has the same challenges to the same degree. For example, biotechnology has an inherently longer cycle from genesis to liquidity, which mitigates the extended time to exit that the economy is imposing on our industry as a whole,” Burton said. “The current financial crisis is serious, there is no doubt, but our funds, whether focusing on information technology or other areas, are telling us that deals are being done, and their portfolio companies are continuing to mature and evolve to meet the needs of their market niches.”

NYT: Runway for Biotech Funding Dangerously Short

Scary article from the NYT on the financial crisis in the biotech industry...

October 29, 2008
Broader Financial Turmoil Threatens Biotech’s Innovation and Cash
By ANDREW POLLACK

So many biotechnology companies talk about “extending the runway” these days, you might think they had entered the airline business.

But for them, runway refers to the time before a company runs out of money. And with financial markets in turmoil, the runways are looking dangerously short for many small biotechnology companies. A biotech crash, if it comes, could threaten an industry that plays a vital role in turning scientific advances into usable medicines.

“If you imagine a plane falling slowly to earth, the financial crisis just tipped the nose straight down,” said Andrew Baum, chief executive of SemBioSys Genetics in Calgary, Alberta, whose stock trades on the Toronto exchange.

SemBioSys, which hopes to use genetically engineered safflowers as a low-cost way to produce insulin and other drugs, said last week it would cut about 30 workers, or more than 40 percent of its work force. Even so, the company’s cash might last only until the middle of next year, Mr. Baum said.

Many other biotechnology companies are starting to cut their work forces and even eliminate research and drug development projects in a desperate effort to extend the runway. Some might have to sell themselves at a bargain price, like Avalon Pharmaceuticals did Tuesday to Clinical Data for $10 million in stock.

The problem is that newly risk-averse investors are shunning biotechnology stocks, which are among the riskiest investments around, because most experimental drugs fail.

Biotech companies accounted for 86, or 25 percent, of the 344 companies that, as of Oct. 9, were in danger of being delisted by Nasdaq because their share price was less than $1 or they failed to have an adequate market valuation.

One of those is DeCode Genetics, which has regularly made headlines for discovering genes linked to cancer, heart attacks and numerous other diseases. The company’s stock has fallen more than 90 percent in the last year to 29 cents a share.

Investors apparently are concerned that the company’s cash is running low and that it will have trouble paying a $230 million debt that comes due in 2011. It has not helped that DeCode is based in Iceland, which has suffered a financial collapse, and that it lost millions of dollars on investments in auction rate securities. The company is now planning to sell certain operations.

There are exceptions, of course. The big biotechnology companies, including Genentech and Amgen, have products on the market and are highly profitable. The biggest companies are in such strong financial shape, in fact, that their shares are roughly flat for the year, far better than stocks as a whole.

But most biotechnology companies — several hundred publicly traded ones and thousands more in private hands — are unprofitable and can sustain themselves only with periodic infusions of cash from willing investors or pharmaceutical companies. It can take hundreds of millions of dollars and 10 years or longer to bring a drug to market.

“For a biotech company, cash is a raw material,” said George Milstein, head of investment banking at Pacific Growth Equities, an investment bank specializing in health care.

Some 113 biotechnology companies, up from 68 in the first quarter, now have less than a year of cash at their current spending rates, according to Rodman & Renshaw, an investment bank. That is about one-third of the publicly traded biotech companies it tracks.

Lack of access to credit is not the main problem for small biotechnology companies, which are considered so risky that even in boom times they cannot borrow much money from banks.

Some, though, have issued securities convertible into common stock, which might have to be paid back in cash if the stock price falls below the conversion rate.

That happened to AtheroGenics after its drug for heart disease failed in a clinical trial. Paying off $30.5 million in notes that came due in September would have left it with little cash to test its drug as a treatment for diabetes. So it defaulted, entered bankruptcy and is now trying to sell itself or the drug.

For biotechnology companies, though, the main impact of the credit crisis involves the broader market. Some hedge funds have pulled out of biotechnology investing, while others have had to sell shares to cover losses elsewhere or to return money to their investors.

To be sure, the industry has been through funding droughts before, such as in 1998 and again in 2002, and most companies survive.

But this crisis comes as other factors were already souring investors on biotechnology. Drug development has become longer and more costly, in part because the Food and Drug Administration has become more demanding. And there is more pressure to cut drug prices.

So far this year, public and private biotechnology companies have raised $5.6 billion, according to the publishing company FDC-Windhover’s Strategic Transactions database. That is only one-third the amount in all of 2007 and likely to be the lowest amount since 2002.

It has been virtually impossible for biotech companies to go public this year. That deprives venture capitalists, who help start and nurture small companies, of one of the main ways of realizing a return on their investment. And it means they have to keep financing their companies longer. Those factors — plus the fact that some venture capitalists are investing in publicly traded biotechnology companies because their shares have become so cheap — mean there will be less money left for starting new companies.

When investors do invest, they are more often insisting on quick returns. Robert I. Blum, chief executive of Cytokinetics, a publicly traded company based in South San Francisco, Calif., said hedge funds had constantly pressed him to spend money only on the company’s drugs that were already in clinical trials and to abandon earlier-stage research aimed at finding new drugs.

“They were challenging us and critiquing us for still investing in research,” Mr. Blum said. He said such pressure threatened to dry up innovation.

Cytokinetics partially bowed to the pressure in September, cutting some of its early research and dismissing 45 employees, or 29 percent of its work force.

As a company’s cash and stock price diminish, raising money becomes even harder. Companies do not like to sell new stock cheaply because it dilutes existing shareholders. And potential new investors, sensing a company is desperate, drive a harder bargain. So do pharmaceutical companies, which are desperate for new drugs and have the cash to buy smaller biotechnology companies.

“I have a sense that Big Pharma is sitting on the sidelines waiting for them to hit bottom,” said Dennis Purcell, senior managing partner of Aisling Capital, a life-sciences investment firm.

Fund-raising would also get harder if Nasdaq carried through on its threat to delist biotech companies that have become penny stocks. But with so many companies in various industries in trouble, Nasdaq has now suspended enforcement of its delisting rules for three months, until Jan. 19.

Some companies are managing to get money. Phenomix, a San Diego company, put off trying to go public but licensed a diabetes drug to Forest Laboratories for an initial payment of $75 million. Ista Pharmaceuticals of Irvine, Calif., got a $65 million credit line from Deerfield Management and two other shareholders.

But risk aversion is spreading even to some companies not in immediate danger of running out of cash.

Despite having about $200 million on hand, Maxygen last week suspended work on its lead drug — aimed at protecting cancer chemotherapy patients from infections — rather than commit $100 million or so to move the drug through clinical trials. The company, based in Redwood City, Calif., said it would reduce its work force by 30 percent and would explore selling itself.

Russell Howard, the chief executive, said the company’s market valuation was only about $130 million. That is less than its cash on hand, meaning investors were placing no value on the drug or any of the company’s other programs.

“Why would you be investing more in this business,” he said, “if the market doesn’t care?”

Mid-Atlantic Bio a "Premier Regional Bioscience Conference"

From the Frederick News-Post
http://www.fredericknewspost.com/sections/business/display.htm?StoryID=81907

Balog's Biotech — Mid-Atlantic Bio 2008
Originally published October 26, 2008


By Jason E. Balog

While most national and international conferences for the bioscience industry occur in the spring and summer, over the past several years the industry has seen the proliferation of a number of regional conferences that primarily occur in the fall and early winter. These smaller regional gatherings have become a great way for a local region to showcase and celebrate its bioscience industry and help create excitement in the local community.

The Mid-Atlantic region is lucky to have what has quickly become recognized as one of the best local conferences, drawing heavy attendance from the local bioscience community as well as from outside the region. Earlier this week (Oct. 22 through Oct. 24), the local bioscience community gathered at the Westfields Marriott Conference Center in Chantilly, Va., for the latest installment of Mid-Atlantic Bio.

Mid-Atlantic Bio is the Maryland, Virginia and Washington regions' annual bioscience conference, co-hosted by the Mid-Atlantic Venture Association, the Virginia Biotechnology Association and the Tech Council of Maryland/MdBio. Mid-Atlantic Bio was created four years ago and was hosted in Washington for its first two years before moving to Bethesda last year and Virginia this year.

In its short history, Mid-Atlantic Bio has quickly gained recognition as a substantive, regionally hosted forum and a popular place for members of the local bioscience industry to gather.

Along with numerous marketing and networking opportunities, Mid-Atlantic Bio is composed of three major components. First, attendees are presented with the opportunity to hear from leaders in the bioscience industry about innovations and advances in the industry. These opportunities range from breakout sessions focused on specific topics to keynote speakers addressing regional and industry wide topics. Some of the notable speakers at this year's conference included Virginia Gov. Tim Kaine, Food and Drug Administration Commissioner Andrew von Eschenbach, and former President and Chief Executive Officer of MedImmune David Mott.

Mid-Atlantic Bio also presents investors the opportunity to learn about the initiatives of individual bioscience companies and research organizations through in-depth company presentations. Of the numerous companies that requested an opportunity to present at this year's conference, 26 companies were selected for two tracks. Ten later-stage growth companies were selected to present as part of the Showcase track. The showcase companies were all established, funded companies representing some of the brightest technologies and companies in the region.

Sixteen emerging companies also were selected to present as part of the Growth Watch track. These companies represented a wide spectrum of early-stage companies all with one primary goal in mind: to find a funding source from the numerous venture capitalists, angel investors and other qualified financing sources in attendance. The presentations are always a highlight of Mid-Atlantic Bio and showcase the cutting-edge technology being developed in the region.

Finally, Mid-Atlantic Bio presents exhibitors a chance to showcase their capabilities and offerings in the lively exhibitor hall. Exhibiting companies generally represent the backbone of the local bioscience community and include local universities and research institutions, business development agencies and a wide range of service providers among others. As in the past, the exhibitor hall at this year's Mid-Atlantic Bio was the place where relationships were forged and deals were struck, again making it the place to be at this year's conference.

What has set Mid-Atlantic Bio apart from other regional conferences has been the successful mix of informative speakers, exciting company presentations and lively exhibition space. Mix these elements together in a location that is in the heart of one of the most vibrant bioscience hubs in the country and you instantly have the ingredients for success. As a result, Mid-Atlantic Bio has quickly become one of the premier regional bioscience events in the country. Next November, Mid-Atlantic Bio returns to Washington for its fifth anniversary at the Walter E. Washington Convention Center, and organizers are already anticipating the largest and most successful event yet.

Jason E. Balog is a principal in the law firm, Miles & Stockbridge, and leads its life sciences, biotechnology and pharmaceutical practice group. For information, please visit www.milesstockbridge.com.

Mid-Atlantic Bioscience Companies See Crisis as Severe, But Survivable

2008 Mid-Atlantic Bio today announced that respondents to a pre-conference survey acknowledged the severity of the global credit crisis in affecting bioscience companies in the mid-Atlantic region, but believe it can be weathered with appropriate planning. 2008 Mid-Atlantic Bio will take place October 22-24 in Chantilly, Va. Dedicated to promoting the growth of biotechnology in the Mid-Atlantic region, 2008 Mid-Atlantic Bio is sponsored collectively by the mid-Atlantic’s most influential bioscience and investor associations, Mid-Atlantic Venture Association (MAVA), Tech Council of Maryland/MdBio (TCM/MdBio), and the Virginia Biotechnology Association (VaBIO). The conference attracts more than 700 senior executives from the life sciences industry, as well as investors, financiers, capital sources, international delegations, attorneys, service providers, and consultants.

In today’s declining economic climate, respondents said that obtaining adequate early stage, or A Round, funding is the biggest challenge to developing a bioscience company in the Mid-Atlantic region today. Access to adequate angel funding was also cited as a significant challenge.

“More than 90 percent of respondents believe the current state of the economy is serious and will significantly impact their enterprise, but that it is survivable and will ultimately rebound,” said Douglas A. Doerfler, conference steering committee chairman and president and chief executive officer of MaxCyte, Inc. “Our companies are taking the current decline very seriously and responding with swift and certain actions. This week’s meeting brings our life sciences community together to focus on these critical issues,” he added.

The poll showed that companies plan to survive the turmoil by looking for alternative forms of revenue while managing expenses, collaborating and more aggressively pursuing partnering opportunities, and aggressively pursuing private equity investment.

Respondents also foresee considerable merger and acquisition activity ahead involving life sciences companies and large pharmaceutical firms. When asked what they believed would likely be the ultimate outcome for a biotechnology company in the Mid-Atlantic today, two out of three predicted acquisition by “Big Pharma,” while only one in five believed companies of like sizes would merge. The remainder predicted companies would grow stand alone, independent companies with marketed products.

Respondents were also asked about one of the most hotly discussed topics in the biotech industry today - “follow-on” biologics, also known as “biosimilars” or “generic biologics,” which are under consideration by the U.S. Food and Drug Administration. Two thirds of respondents viewed FDA approval of a pathway for these products to be positive for the biotech industry.

“The survey results suggest that a majority of the biotech industry would view FDA approval of follow-on biologics as a positive development, observed Natasha Leskovsek, a partner with Cooley Godward Kronish LLP, and moderator of a Follow-on Biologics panel taking place at the conference on October 23. “Particularly in the current economic climate, a market with more participants may increase patient access and stimulate overall demand and further innovation, while ensuring adequate protections for innovator companies,” she said.

UVA Spinout Catena Pharmacueticals Licenses GPCR Tech from School

Catena Pharmaceuticals said this week that it has obtained a worldwide, exclusive license to intellectual property surrounding anti-angiogenic G-protein coupled receptor antagonists from the University of Virginia Patent Foundation.

The licensing agreement covers multiple patents and patent applications covering GPCR chemistries and methods discovered by UVA researchers Kevin Lynch and Timothy Macdonald.

Lynch and Macdonald identified antagonists of a subset of GPCRs specific for lysophosphatidic acid, an angiogenic molecule that promotes tumor growth. Autotaxin, the enzyme that manufactures LPA, is a recognized oncogenic protein.

Financial terms of the licensing deal were not disclosed.

Catena, which recently spun out of the university, also said that it has received an undisclosed amount of seed financing from Golden Pine Ventures to support product development at the company.

Ian Mehr, managing director of Golden Pine Ventures, will serve as president and director of Catena. Lynch and Macdonald will serve as vice president of biological sciences and vice president of chemical sciences, respectively, and will sit on Catena’s board.

From Biotech Transfer Week

New HHMI President Wins Nobel Prize

Roger Tsien Wins 2008 Nobel Prize in Chemistry

The Royal Swedish Academy of Sciences announced this morning
that the 2008 Nobel Prize in Chemistry was awarded to Roger
Y. Tsien, a Howard Hughes Medical Institute investigator at
the University of California, San Diego (UCSD), Osamu
Shimomura of the Marine Biological Laboratory, and Martin
Chalfie of Columbia University. The three were honored for
“the discovery and development of the green fluorescent
protein, GFP.”

For more background on Roger Tsien's research, including an
extensive biographical profile of Tsien, please visit the
HHMI web site at www.hhmi.org.

To read the full story, go to http://www.hhmi.org/news/nobel20081008.html

Wyeth Consolidation: Only 61 Jobs Cut in Richmond

By JOHN REID BLACKWELL
TIMES-DISPATCH STAFF WRITER
Pharmaceuticals maker Wyeth said yesterday that it will consolidate its East Coast distribution centers next year, costing 61 jobs at the company's distribution site in Henrico County.

The Madison, N.J.-based company plans to move its consumer health-care products distribution from the local site at 2300 Darbytown Road to a larger plant in Knoxville, Tenn., that also serves the East Coast.

About 70 employees will continue to work at the local site, a 286,000-squarefoot building, in support functions such as quality assurance and a call center, Wyeth spokesman Rob Norman said. "This just impacts the logistical services group at the facility," he said. "Wyeth does not intend to sell the facility," Norman said. "However, the company is in the process of determining the best use of the space that will become available."

The logistical operations will be phased out starting in January and close by May, he said. The company said it would provide severance, extended benefits and outplacement help to affected employees.

Norman said the change will not affect Wyeth's other local operations, including its manufacturing plant at 2248 Darbytown Road that makes consumer health products such as ChapStick, Robitussin and Preparation H. The company has about 1,200 employees in the Richmond area.

Moving the local operations to Knoxville will improve the efficiency of Wyeth's U.S. distribution network, the company said.

The Henrico site distributes consumer health products in 14 Eastern states, including Virginia, and its volume accounts for about 30 percent of the company's annual sales.

The Knoxville center, which also distributes other pharmaceutical products, is 600,000 square feet and has the capacity to serve all of the company's East Coast customers, the company said. Wyeth has a West Coast distribution center in Sparks, Nev.

In July, Wyeth said it would close its administrative office at 1407 Cummings Drive, just off Interstate 95 in Richmond, and move those offices to its nearby product-development center at 1211 Sherwood Ave. by early next year.

Richmond Times Dispatch...

SSTI: How are Immigrant Workers Changing the Face of U.S. Innovation?

From SSTI:

Recent Research: How are Immigrant and Ethnic Workers Changing the Face of U.S. Innovation?
Foreign-born and ethnic workers continue to rapidly grow in their importance to the U.S. innovation economy, according to two recent studies that address this issue by examining the links between these groups and patenting activity.

In How Much Does Immigration Boost Innovation?, Jennifer Hunt uses state panel data from 1950 to 2000 to measure the extent of immigration's impact on U.S. patenting, state innovation economies and the science and technology workforce. Foreign-born residents account for just over ten percent of the working population, but represent about 25 percent of the science and engineering workforce. The 2003 Survey of College Graduates found that immigrants patent at double the rate of native U.S. residents. That study found that the difference was attributable to disproportionate educational attainment in science and engineering.

Hunt finds that a 1.3 percent increase in the share of the population composed of immigrant college graduates can increase patenting per capita by between 10 and 26 percent. Post-college immigrants had an even larger positive impact. In addition, immigrant college graduates can have positive spillovers for the non-immigrant population. While there may be some short-term crowding out of the native population as immigrants arrive, in the long-term, there is evidence that post-college immigrants can increase the patenting activity of their native neighbors.

Overall, Hunt argues that an immigrant college graduate contributes at least twice as much to patenting as a native counterpart.

Purchase How Much Does Immigration Boost Innovation? from the National Bureau of Economic Research (NBER) at: http://www.nber.org/papers/w14312.pdf

BIO's CEO on Global Credit Crisis

The Financial Crisis and Biotechnology

October 3, 2008


This week we want to take some time on our Web site to focus on the profound impact the financial crisis has had on biotechnology companies.

Biotechnology companies are highly dependent on well functioning capital markets to finance their development projects since many will not see revenue for perhaps a decade.

It generally takes approximately $1 billion, including the cost of failures, to get a new therapy to market. This financing generally comes in the form of equity investment.

When credit markets seize up, as we've seen in the past 13 months, there is less capital available for investors to put at risk, and the capital that is put at risk is dedicated to shorter term, lower risk options. So while some areas of the economy have seen a slowdown, biotech has seen a near-freeze.

This means that our companies - especially our public companies - are in a very precarious situation: they must continue on their development projects, but are unable to attain additional financing from investors. As a result, many of the 300-400 public biotech companies are trading at very low levels, and many are operating with less than one year's cash remaining.

If credit markets don't open up, it's possible that the biotechnology industry may go through a considerable consolidation or shake out during the next year. The result? Companies with promising therapies may not be able to continue their work, delaying the availability of new options for patients.

We recognize this difficult climate for our industry. As Congress moves beyond the current crisis, we will work with members of Congress and the administration to develop a series of legislative and policy remedies that will help improve the investment climate and reduce administrative burdens. These initiatives include provisions to shore-up companies' balance sheets and incentives to attract and retain investment in our industry.

We will work with allies across numerous industries - those innovative industries similar to ours - as well as new partners to develop these initiatives and urge Congress for action.

Jim Greenwood
President and CEO
Biotechnology Industry Organization, BIO

Over 72 turn out for inaugural Hampton Roads Luncheon

From Hampton Roads Bioscience Luncheon

Thank you to everyone who came to the inaugural Hampton Roads Bioscience Luncheon for making it a huge success. It was a full house with over 72 people attending to hear The Honorable Philip A. Hamilton from the Virginia House of Delegates, and Dr. William Wasilenko of Eastern Virginia Medical School speak. You can view photos of the event on our website.

Boots Centre for Innovation-- Call for Proposals

Boots Centre for Innovation (BCI) - www.bootsinnovation.com - has been established to work closely with early stage companies or inventors to develop pioneering products for the shelves of Alliance Boots stores that will improve the quality of life for consumers across Europe.

Alliance Boots is a leading pharmacy, health and beauty company with a retail network of 2,400 Boots stores in the UK, and access to 100,000 pharmacies across Europe.

Call for Proposals
We will be seeking proposal submissions of products and technologies that may be of interest to Alliance Boots in their 10 consumer focus areas:

1. Improve ways to diagnose, treat and monitor key aspects of health, beauty and wellbeing through use of devices
2. Support positive ageing through products and devices for mind and body
3. Minimize the complications of living with chronic conditions
4. Improve digestive health, particularly issues related to stress, poor diet and obesity
5. Improve and maintain the health, look and feel of skin
6. Minimize the severity and duration of pain
7. Improve quality of sleep for everyone, including pregnant women, babies and the elderly
8. Create more convenient methods of taking and using medicines and health products
9. Improve the health and appearance of teeth and gums
10. Improve the health, appearance and comfort of eyes

This is an excellent opportunity to have your technology or product potentially developed and sold through the vast Alliance Boots retail network.

New Product Innovation Seminar & Direct Interviews
BCI will also be hosting a New Product Innovation Seminar in Boston in early December, which will allow selected companies to understand how to access Boots with new ideas and how to work with them in partnership to bring ideas to the shelf across Europe.

Do you have a product concept or idea that you would like to submit to Boots Centre for Innovation?

Please complete the Boots Centre for Innovation Questionnaire by clicking here - www.bootsinnovation.com/bostonevent.html

Proposal Deadline
The deadline for submission of proposals is October 30th 2008.

Additional Information
Please contact Louise Bryce - Tel: 011 44 1792 602 673, or email info@bootsinnovation.com