Starting A Biotech Company In The Midst Of Recession
By Mansour Bassiri, Ph.D., founder and CEO, Bioxiness Pharmaceuticals
Drug discovery is inherently a tough business and a high-risk investment with huge costs and lengthy timelines necessary to bring most products to market. The industry is further challenged with overwhelming regulatory hurdles and the complexity of the science itself. Compounding that picture today is a number of disturbing events and trends, including restraint or lack of aspiration toward the industry by many investors in both public and private capital markets and a corresponding major shift in some parts of the venture capital sector. Additionally, the lack of public market liquidity, escalating new product discovery costs, and similar conditions continue to threaten young companies and their respective entrepreneurs.
HOW DOES A START-UP BIOTECH PREVAIL?
Small biotechnology companies are essential components of the intellectual infrastructure of America’s 21st century economy. Developing important treatments and cures by our industry will play a critical role in reducing healthcare costs, improving quality of life for patients, and creating high-quality, high-paying jobs. New antibiotics are especially important given the growing number of resistant strains of bacteria being spawned by the abuse and overuse of antimicrobials worldwide.
In the United States, we urgently need to create public-private partnerships to contain and combat antimicrobial resistance. To achieve an effective goal, federal funding such as Therapeutic Discovery Project (TDP) grants are needed to fund a wide range of projects focusing on basic research, strategies for the prudent use of existing antimicrobials, development of new antimicrobials, and development of point-of-care diagnostic tests.
In 2010, TDP tax credits and grants provided $1 billion to small biotech companies throughout the United States. Companies with fewer than 250 employees which had made qualified investments in the development of promising new therapies designed to treat or prevent costly and chronic diseases were eligible for the program. Nearly 3,000 small companies received funds from the program for more than 4,500 innovative projects. With this funding, these small companies were able to save and create high-quality, high-paying American jobs.
S. 3232 would extend the Therapeutic Discovery Project for an additional $1 billion to cover qualifying therapeutic investments made in 2011 and 2012. It would also refine the program to ensure that taxpayer dollars go to the most deserving and innovative companies and to projects with the most significant potential to meet the medical challenges America faces. This proposed reauthorization of TDP comes at a crucial time for the biotech industry, as capital availability is significantly constricted for growing companies. According to the National Venture Capital Association’s quarterly report, the number of first-time financings for life sciences companies in 2011 was at its lowest level since 1996. The crucial capital injection from a reauthorization of TDP would allow companies such as ours to continue their work of speeding treatment and cures to patients whose lives depend on them while also creating high-quality, high-paying American jobs.
Our company was a recipient of a TDP grant, which led to matching investments from other sources, enhancing our credibility with investors. Consequently, we were able to leverage the TDP grant and quadruple the impact of the funding, resulting in a net gain of more than $1 million that is being used to further our research. The funding enabled the company to extend its R&D activities by two years, hire highly-skilled researchers (consultants and U.S.- based CROs), and advance its patent portfolio from the international filing stage to the national stage in multiple countries around the globe. Without this TDP grant, start-up companies like ours would essentially not have been able to continue research on a potential new class of life-saving antibiotics. The future survival of start-ups will involve a dynamic blend of public-private partnerships with solutions that tackle both scientific and financial holdups while identifying the essential components of the intellectual infrastructure of America’s 21st century economy.