CTA: Is funding for new biotech and/or pharma companies available?
JM: There is money, but people are more aware of risk than in the 1990s. People are not necessarily thinking about investing in biotech or pharma companies and they may be looking for other business opportunities that are less risky and more profitable in the short term. It is feasible for established companies to get money to go to a phase II or late stage clinical trial, but it is very difficult for start ups.
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CTA: Why would that be?
JM: Due to volatility in the market and insecurities on a global basis. People are hesitant in putting loads of money in endeavours that are risky by default, and that have lots of failures and few successes.
CTA: Is there a way to overcome this challenge?
JM: The risk will always be there, it is a risky industry. The mentality of the people has to be changed. They have to be willing to take risks knowing that if they are successful the return on investment will be much bigger than in a more secure area of business. There have been some improvements in the last two years, but the Greek crisis, the problems in Ukraine and in other countries are not encouraging risky investments, especially not in Europe.
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By GlobalDataCTA: How do you think we can change this mentality?
JM: There are obvious reasons why people are a bit more hesitant that are not related to the pharma industry itself, but to global circumstances. We have conferences and bio meetings and people use these forums to present themselves and to have contact with investors. That still works well, but the ultimate decision of actually investing the money has become more difficult than ten years ago. You need to have much more proof and evidence that what you are developing is going to work in the patient before you get financial support.
CTA: What areas are investors more interested in?
JM: Currently, immuno-oncology is an attractive field for both researchers and investors because newly developed drugs in this area were shown to create astonishing improvements in the treatment of certain cancers. If you have something new in this exciting field of research and positive results in a relevant animal model, there is a good chance of getting support from investors. There is also a lot of enthusiasm and interest in supporting drug development for orphan diseases with no or very few treatment options.
CTA: What are some of the financing models that are more suitable for small companies?
JM: Whether money comes from institutional investors, venture capitalists, business angels or the government, it does not really matter as long as the financial support is sufficiently high, and without discouraging conditions for entrepreneurs. VC firms today ask for a lot for very little money. They might agree to give you a couple of million but may ask in return for a very large share of your company. That discourages founders and young entrepreneurs because when the founder begins to turn his idea into a product, he or she may no longer be in a position to make decisions in the company and without a decent return from all the effort he or she has put in. Government money could be helpful if it is not given too wide-spread, because then too many would be getting a few hundred thousand instead of the 5-10 million needed to create value in our business. Soft loans are sometimes attractive, too, depending on the country and repayment conditions. Investors are positively impressed by novelty and innovation, by strong teams, involving senior managers with a good track record.
Investment should focus on early stage companies but with sufficient support to allow for success rather than giving a little bit of money to a lot of companies.
If companies can then prove that what they are doing has a good chance of success, then the funding and support should continue. If not, they should stop and do something else. It sounds a bit harsh, but it is better for the industry that projects are terminated early when first results show that they are less likely to be successful.
CTA: What would be the consequences of not getting the funding needed?
JM: If one particular project does not get the funding needed, it does not really make a difference. But if 20 or 30 ideas cannot be developed, it does have an impact. There would be less progress and improvement of current therapies, and no further relief of unmet medical needs. Also, a further discouragement of the people who want to take the difficult task of creating and developing new medicines would ultimately cause job losses and it would cause a big downgrade to improving healthcare, one of the most important areas in the industry.
