Don't let the past obscure your future

The baseball great Satchel Paige once famously observed: "Don't look back. Something might be gaining on you." And 2007 seems to be a year that the biotech industry can never stop looking back on.

That's the time when venture cash flowed. All ideas could find backers. The sun, in Camelot fashion, was always out in the day and it rained only at night. Or so it seems now.

These days, though, there are two schools of thought on the financing scene in biotech. One centers on a now common theme: The salad days are over, IPOs are out, VCs are retreating and the current hard times have forced the few hardy biotech survivors to fundamentally reshape the way they go about setting up companies and advancing new drugs. The other focuses on the not inconsequential fact that venture capital in the biotech community has been on the rise since the '08 crisis, jumping significantly in 2011, and there are plenty of ambitious VCs out there with money to invest in smart, lean companies.

The Wall Street Journal has reprised the language of the biotech recession in its latest recap--hammering away at the more common story line and using a string of biotech failures as anecdotal evidence to back up the trend line: It's awful out there. And there are plenty of insiders willing to back that up, in various ways.

"The bubble mentality, where every good idea gets funding, is over," Elias Zerhouni, Sanofi's R&D chief and the man BIO chose to examine the financing issue, tells the Journal. That's an issue that Zerhouni's boss, Chris Viehbacher, likes to focus on as well. But he also likes to add that that's why he recently joined forces with Third Rock to launch Warp Drive Bio.

It's certainly true that the go-go days are over--and have been for some time. That's what happens to good times in a cyclical economy, though the 2008 crisis certainly added a lingering twist by scaring the wits out of investors. But what the Journal story lacks, aside from a brief nod to 2011's rising venture investments, is any evidence that new companies with good ideas are on the rise. Venture players like Third Rock and Sofinnova and Flagship have been gathering new funds and making new plays. Big Pharma, for all its travails, has been eagerly buying up companies and licensing in new products as their corporate investment arms make up some of the gap left behind by discouraged investors. There's evidence that new venture money for startups is now on the rise, which could help reshape the biotech planet in relatively short order. Big hubs--led by Boston--are seeing expansive behavior.

There are two sides to this story. Neither mindset should eclipse the other. So don't look back if it makes you lose sight of what's ahead.  

Ironically, I'm in Amsterdam today to moderate a panel on new business models to match the current financial environment. I will let you know tomorrow what the industry experts think. -- John Carroll, Editor (Twitter | LinkedIn)

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