A Fierce Letter to the UK Biotech Industry

Written By John Carroll, FierceBiotech

A few weeks ago, I launched the EuroBiotech Report in our Friday issue of FierceBiotech. I’ve been kicking around this idea for a couple of years now, shaping the strategy during the regular trips I make to visit with people in the industry here.

Regular readers will know that we routinely cover drug development and marketing in our online publication group. Not a day goes by that I don’t touch on at least one of the giants like Roche, GlaxoSmithKIine, Novartis and AstraZeneca. And I’ll routinely pick up news about a major funding round on the continent or an innovator in places like Cambridge and Stockholm.

But frankly, it’s never been very comprehensive. A lot of biotech news in particular went under the radar. In our new report, we now have the chance to go deeper into events here.

One of the reasons why I’ve been coming to the UK and other European countries regularly over the years is that we’ve attracted a substantial audience here without covering many of the smaller and medium-sized companies in any kind of depth. (The breakdown on subscribers — and there are more than 200,000 in the life sciences group — is 72% U.S. and Canada, 16% Europe and 10% Asia.) I suspect that’s because there’s a lot of interest here in what goes on in the U.S., where – let’s face it – there’s a lot more money and deals waiting for interesting players.

Over the past 18 months or so, the U.S. has also seen a boom in IPOs which has been funneling billions of dollars to developers. When it rains, it pours. And right now the flood is reaching near biblical proportions. The U.S. enjoys a good time as much as any. But what zooms up tends to turn around and head south just as fast. So I’m waiting for the other shoe to drop at some point, and when it does it’s going to hurt.

In the meantime, the sudden influx of cash has inspired a sharp spike in the value of biotech assets. When you can raise $80 million on the market and value your company at $600 million ahead of profits or approved products, you tend to think of your pipeline assets as inherently more valuable. And frankly, the productivity in many Big Pharma organizations has been so lamentable for so long that they have to pay a premium to play now. This is something that I was able to discuss recently at the Babraham Institute in Cambridge at the invitation of One Nucleus.

In Europe, though, biotech IPOs have only recently begun to appear achievable. In the U.K., where a series of major biotech failures a few years ago soured the market for investors, this has been a particularly grievous sore point. There’s also a significant lack of major venture funding for existing biotechs. And while government initiatives are welcome, they are rarely enough to sustain a biotech for any length of time.

As a result, biotech assets tend to be undervalued in Europe.

In a sense, that’s ridiculous. No one can dispute that the level of science in the UK or Sweden or Germany or elsewhere is anything less than world class. AstraZeneca promotes that every day when they extol the virtues of Cambridge UK. J&J and Merck helped a lot when they decided to build business development teams in London, base camps for all of Europe.

The field of scientific discovery provides the raw materials that biotechs work with to make experimental products, and in turn Big Pharma is there to partner on the most innovative efforts. A new cancer drug in Germany or a new approach to depression (maybe not the best choice of diseases in terms of strategic positioning, but I’m talking about unmet need here) in the UK is pointed at the same global market and has the same intrinsic value as one in the U.S. But it’s more likely to be valued at a lower rate in Europe because companies here are more likely to be strapped for cash.

One of the reasons why I decided to run the EuroBiotech report in the Friday issue of FierceBiotech is because I wanted to bring the U.S. audience to Europe, much the way the European audience is already engaged in U.S. affairs. The same basic flight to London from Boston takes no more time than flying to San Francisco. The same venture player that can organize a $40 million round for the right technology in the U.S. can do it in Oxford.

Don’t misunderstand me. There are many companies in European biotech that are doing just fine. I want to cover more about the data, deals and euros/pounds here because we can sell advertising around it. Fierce is free for readers, but we’re a commercial enterprise, thank you, and doing quite well by it. We’re not doing this for altruistic reasons.

But in my own modest way, opening up a window into the European biotech scene is aimed at encouraging a change in the global flow of attention and thereby capital. That’s much easier said than done, of course. Americans are creatures of habit, just like everyone else in the world. And that includes the good and the bad related to a certain U.S. brand of mono-cultural obsessiveness. (Some might like to call it provincialism, but you can’t engage an audience by starting with an insult and a sneer, y’all.)

Whatever your nationality, when you play in biotech you’re an executive of the world. Small and large companies and financiers have to think in terms of global strategies. And disruptive media players like ourselves can take advantage of that. There’s precious little in-depth coverage available for European biotechs in Europe. We’re going to fill that gap.

Then I’ll need to start learning Mandarin.

Written By John Carroll, FierceBiotech

 The One Nucleus blog is written by individuals and is not necessarily a reflection of the views held by One Nucleus.


About onenucleus

The One Nucleus blog is written by individuals and is not necessarily a reflection of the views held by One Nucleus.
This entry was posted in November 2011. Bookmark the permalink.

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