Table 1. Old Versus New Paradigm in Biotechnology Collaborations

In addition, the negative considerations from large pharmaceutical partnerships are often overlooked, which begs the question: is it better to partner, or go alone?  To help address the topic, this article focuses on the oncology segment of the life science industry – one of the most popular therapeutic areas for partnering and merger & acquisition [M&A] activity.

Luck Vs Skill

Prior to addressing the question of whether or not a small biotechnology company should collaborate with a larger pharmaceutical organization, we solicited investor views regarding the process of corporate partnering.  Some of the feedback indicates there is a lack of transparency.

“As an investor, partnering activity is the most opaque part of our companies’ business,” said David Sable, portfolio manager, Special Situations Life Sciences Fund.  “Every small biotech CEO tries to create an image of limitless interest on the part of big pharma in each of the company’s projects, a dynamic that will inevitably result in a value-maximizing transaction.  Many management teams deliver on these promises; in retrospect, however, at least as many seem to have parked their molecule in the front yard with a ‘For Sale’ sign and hoped for the best.  While we can validate the importance of a molecular pathway, double-check market size predictions, run our own statistics and reality-check pricing assumptions, we have no way to identify talent in business development.”

Left at the Altar

One of the most important negative considerations for biotechnology companies looking to partner is that large pharmaceutical companies often shift resources and the focus of their pipeline development candidates over time, which may put their collaborators at risk.  Although sometimes done for strategic reasons rather than due to new clinical insight, the sudden departure of a large pharmaceutical partner can reflect poorly on an otherwise promising product candidate.

For example, Celldex Therapeutics, Inc. (CLDX) announced in September 2010 that the company would regain full worldwide rights to develop and commercialize rindopepimut [CDX-110] from Pfizer, Inc. (PFE).  The companies had entered into a global development and commercialization agreement in April 2008 for rindopepimut, an experimental therapeutic cancer vaccine that targets the tumor-specific molecule epidermal growth factor receptor variant III in patients with glioblastoma multiforme.  Pfizer informed Celldex that the rindopepimut program was no longer a strategic priority of Pfizer and terminated the agreement despite the fact that the product candidate met or exceeded all pre-determined safety and efficacy objectives across three clinical studies.  Shares of Celldex, which traded as high as $9.49 during 2010, reached a 52-week low of $2.91 on the news.

More recently, Transgene (TNG.PA) announced on February 22, 2011, that Roche Holding (ROG.VX) terminated their 2007 agreement under which Roche had been granted exclusive global development and commercialization rights to TG4001/RG3484, a therapeutic vaccine candidate currently in a 200 patient Phase IIb study to treat notably high grade cervical intraepithelial neoplasia [CIN] lesions [CIN2/3] caused by human papilloma virus [HPV] infection.  While Transgene stated that Roche’s decision to terminate the license agreement was based on strategic reasons and wasn’t data driven, the company’s shares reached a 52-week low on the news.

Hopes and Dreams Vs Revenue Streams

Another potential negative is that by partnering a product candidate, the “hope and dream” multiple of a potential partnership or acquisition may be replaced by the realities of a “revenue stream,” such as milestone payments and future product royalties.  By discounting the economics of a partnership deal for certain risk factors, investors can assign a net present value to the company that may be quite different than the speculative valuation in the absence of a partnership.  Representing a unique opportunity to review the effect of partnering on market capitalization, three separate deals were announced for late-stage product candidates aimed at treating prostate cancer during 2009, while two companies have remained independent [see Table 2].

As the first transaction announced that year, Johnson & Johnson’s (JNJ) acquisition of Cougar Biotechnology for nearly $1 billion in cash in May 2009 initially looked attractive.  However, following approval of Provenge® [sipuleucel-T] in April 2010, the market capitalization of Dendreon Corporation (DNDN) exceeded $7 billion, which demonstrates the potential benefit of remaining independent or retaining worldwide rights.  In contrast, more than a year after partnering their late-stage programs, the market valuations of two other companies, Medivation, Inc. (MDVN) and OncoGenex Pharmaceuticals, Inc. (OGXI), are $605 million and $150 million, respectively.

Using Dendreon’s valuation as an example, it isn’t surprising that Bavarian Nordic A/S (BAVA.CO) announced earlier today that the company is reviewing alternate options to maximize value for shareholders and fund the pivotal Phase 3 trial of its “off-the-shelf” therapeutic vaccine product candidate Prostvac® on its own.  Keeping its options open, however, Bavarian Nordic is exploring opportunities to pursue independent development in parallel with continuing partnership discussions.

Table 2. Late-stage Prostate Cancer Programs

A Means to an End

The biggest argument against partnering is the fact that some of the most successful biotechnology companies to date are those that have commercialized their own products, such as Amgen, Inc. (AMGN), Celgene Corporation (CELG), and several others.

“Celgene is a unique example of success by taking a slightly different approach,” said Charles Duncan, managing director and senior biotech analyst at JMP Securities LLC.  “The company built a pipeline and worldwide infrastructure for Revlimid® [lenalidomide] that was funded and supported through its early sales of Thalomid® [thalidomide].”

“We viewed partnering our lead product as a critical strategic decision that would shape the company and significantly impact our vision,” said Sol J. Barer, Ph.D., Executive Chairman of Celgene Corporation.  “We felt that our pursuing the development of Revlimid worldwide alone was the best option consistent with our vision a of becoming a major global biopharmaceutical company over the next few years.  We clearly recognized the short versus long term trade-offs in the decision; nevertheless, our belief in the product and in our ability to manage the product globally was important in our decision not to partner.”

Some companies have also partnered a specific program in certain geographies or disease settings and use the validation and resulting economics to help advance their own pipeline – sometimes even in competitive areas.  For example, Amgen originally developed Epogen® [epoetin alfa], which the company commercialized as a treatment for anemia in dialysis patients and partnered non-dialysis rights with Johnson & Johnson [sold as Procrit®].  Amgen later developed and commercialized Aranesp® [darbepoetin alfa], an erythropoiesis stimulating protein with a longer half-life and increased biologic activity that was not partnered.

Similarly, Oncothyreon, Inc. (ONTY) has granted a license to Merck KGaA of Darmstadt, Germany for the clinical development, manufacturing, and marketing of Stimuvax®.  Oncothyreon is eligible for cash payments based on the achievement of certain process transfer events, regulatory submissions in first and second cancer indications, regulatory approval for first and second cancer indications, and for sales milestones.  Oncothyreon will also receive a royalty based on net sales.  If successful in the clinic, Stimuvax could also help validate another Oncothyreon product candidate, ONT-10, which is a completely synthetic MUC1-based liposomal glycolipopeptide cancer vaccine that could compete with Stimuvax.  Merck KGaA has a right of first negotiation with respect to ONT-10.

Geographically Undesirable

Although selective encumbered assets can still attract buyers, partnering a product candidate in certain geographies with one large pharmaceutical company may preclude an acquisition by another that is only interested in worldwide rights or control of key markets.  On the other hand, some partnerships can later lead to an acquisition – a strategy employed by Bristol-Myers Squibb Company (BMY) on more than one occasion.

For example, Bristol-Myers Squibb and Medarex, Inc. formed a worldwide collaboration in 2004 valued at more than $530 million to develop and commercialize Yervoy® [ipilimumab, MDX-010], which was in Phase III clinical development at the time for the treatment of metastatic melanoma and multiple Phase II clinical trials in other oncology indications.  In 2009, Bristol-Myers Squibb acquired Medarex for $16.00 per share, a 90% premium over the prior day’s closing price of $8.40 per share, for an aggregate purchase price of approximately $2.4 billion.

What started as a lawsuit for infringement of its patents related to fusion protein technology in 2006, ZymoGenetics, Inc. signed a deal with Bristol-Myers Squibb in 2009 worth more than $1.1 billion for PEG-Interferon lambda, a novel type 3 interferon in Phase Ib development for the treatment of Hepatitis C, and its related development program.  The following year, Bristol-Myers Squibb acquired ZymoGenetics for $9.75 per share in cash [an 84% premium to the prior day close] in a transaction valued at approximately $885 million.

While ultimately thwarted by Eli Lilly & Co.’s (LLY) superior offer in October 2008, Bristol-Myers also attempted to acquire its partner ImClone Systems.  Back in September 2001, Bristol-Myers had entered into an agreement with ImClone to co-develop and co-promote Erbitux® [cetuximab, IMC-C225] in the United States, Canada and Japan.

All that Glitters is not Gold

Maintaining worldwide rights and commercializing a product without a partner doesn’t necessarily translate into a lofty market valuation.  Several companies have struggled to commercialize oncology products on their own.

Allos Therapeutics, Inc. (ALTH) developed Folotyn® [pralatrexate injection], a folate analogue metabolic inhibitor, and began commercializing the product in the U.S. for the treatment of patients with relapsed or refractory peripheral T-cell lymphoma [PTCL] in October 2009.  Since the product’s launch, Folotyn sales have been below Wall Street analyst’s expectations and shares of Allos recently reached a 52-week low of $2.64.

Despite an inauspicious launch in the U.S., some analysts believe that Allos may finally be executing on a regional strategy with the recent filing of a Marketing Authorisation Application for European approval and the potential for a partner in Asia as highlighted during the company’s recent quarterly teleconference with investors.

“If Allos gets traction with an ex-U.S. approval and partnership, investor sentiment will most certainly improve as this will provide some external validation on the viability of a regulatory path and market opportunity in PTCL, despite it being a rare disease and there being emerging potential competition from Celgene’s Istodax® [romidepsin],” said Charles Duncan.  “At this point, all but the most patient, value-oriented investors have extricated themselves from the Allos story due to what we believe to be a lack of confidence in senior management, and having another company to shoulder the risk ex-U.S. will provide a much-needed boost to the capabilities and capital needed to profitably market Folotyn.  Perhaps this too could be an example where a collaboration discussion turns into an acquisition, although we anticipate that should such a scenario materialize, it would likely involve contingent-value rights [CVR’s] given the uninspiring early revenue trajectory.”

Summary

Looking ahead, the trade-off between equity dilution and asset dilution represents an important crossroad that many late-stage biotechnology companies will face in the near future [see Table 3 for a select list].  While one size doesn’t fit all, the fact that Dendreon has achieved the largest market valuation of any company in the late-stage prostate cancer segment of the market by commercializing its product without a partner helps support the notion that going alone may provide the highest value to stakeholders.  Such a strategy requires that the company can access resources and capital to develop and launch its product globally.  If not, a selective or global partnership may be the next best options – provided the terms are attractive and that there is a remaining pipeline to be leveraged in the future.  In the end, whether a company proceeds alone or with a partner, there is an attractive landscape of motivated buyers for late-stage and marketed products that may ultimately lead to M&A.

NEW – Click here to view this article in PDF format.

Table 3. Select Companies with Phase III Oncology Programs Not Yet Partnered

Early this morning, Celgene Corporation (CELG) announced the acquisition of privately-held Gloucester Pharmaceuticals for $340 million in cash plus another $300 million in future U.S. and international regulatory milestone payments.  Gloucester’s Istodax® (romidepsin) was approved in November 2009, by the U.S. Food and Drug Administration [FDA] for the treatment of cutaneous T-cell lymphoma [CTCL] and is being developed for other hematological malignancies, including peripheral T-cell lymphoma [PTCL].

While many potential acquirers may have been sitting on the sidelines watching the market valuations of cash-poor companies continue to decline throughout the year, those depressed share prices may not last much longer.  Improving capital markets for small-cap life sciences companies, evidenced in part by this month’s $48 million follow-on financing by ZIOPHARM Oncology, Inc. (ZIOP), could accelerate merger and acquisition activity in the sector as larger companies race to fill anticipated patent expirations and gaps in their product pipelines.  Indeed, a favorable climate for merger and acquisition activity was one of the main tenets of our positive perspectives for biotechnology in 2009.

Following Celgene’s acquisition of Gloucester, we revisited the baker’s dozen of public biotechnology companies announcing upcoming clinical data presentations at ASH [as of November 27, 2009] from our recent article and identified three small-cap [eg, market capitalization less than $1 billion] biotechnology companies with unpartnered, late-stage [eg, marketed or entering pivotal trials] hematological malignancy programs:

• Allos Therapeutics, Inc. (ALTH): The company is commercializing Folotyn™ (pralatrexate injection), an antimetabolite approved for the treatment of patients with relapsed or refractory PTCL.  While Allos has retained exclusive worldwide rights to Folotyn, which became available in the United States in October 2009, potential competition from Istodax by Celgene/Gloucester may be a concern as a supplemental NDA for PTCL is expected by year-end 2010.  Further, the company was the subject of an article in the December 4, 2009, New York Times questioning its pricing for Folotyn.
• Seattle Genetics, Inc. (SGEN): In February 2009, the company initiated a pivotal trial of its brentuximab vedotin product candidate in patients with relapsed or refractory Hodgkin lymphoma under a Special Protocol Assessment with the FDA.  Seattle Genetics expects to submit both a New Drug Application [NDA] with the FDA under the accelerated approval regulations and a Marketing Authorization Application with the European Medicines Agency for conditional marketing authorization in the first half of 2011.  The company has retained exclusive worldwide rights to brentuximab vedotin.
• Cyclacel Pharmaceuticals, Inc. (CYCC): At the ASH meeting, Cyclacel reported promising 1-year survival data from a Phase 2 randomized trial of its oral sapacitabine capsules in elderly patients with acute myeloid leukemia [AML] and separately interim response data in myelodysplastic syndromes [MDS].  The company is planning to start a pivotal trial with sapacitabine in 2010 and has retained exclusive worldwide rights with the exception of Japan where Daiichi-Sankyo has a right of first refusal to market the drug under terms to be negotiated.

In this regard, Celgene Corporation (CELG) recently announced that data from more than 200 clinical trials involving the company’s products will be presented at the ASH annual meeting.  After reaching a 52-week low of $36.90 in April 2009, shares of Celgene have rebounded nearly 50% to close at $54.97.  As a result, investors may gravitate to other biotechnology companies specializing in the area of hematology to uncover similar investment opportunities.

Accordingly, we recently reviewed press releases from a baker’s dozen of public biotechnology companies also announcing upcoming clinical data presentations at ASH [as of November 27, 2009].  Further, to determine which topics are likely to generate significant visibility and investor interest, we tallied the number of abstracts accepted for each company, identified the product development stage(s), and consolidated the therapeutic classes into the following four general categories:

1. Kinase inhibitors
2. Biologic agents [monoclonal antibodies and small modular immunopharmaceuticals]
3. Chemotherapeutics [antimetabolites, nucleoside analogues topoisomerase inhibitors, and HDAC inhibitors]
4. Others [proteasome inhibitors and anticoagulants]

 See Table 1 below for the results from the 32 abstracts referenced in the press releases.

 Table 1. Baker’s dozen of public biotechnology companies issuing press releases regarding clinical data presentations at ASH

Note: One abstract is listed under both Keryx Biopharmaceuticals and AEterna Zentaris, as perifosine rights have been licensed to Keryx Biopharmaceuticals for North America, while AEterna Zentaris has the rest of world rights.  Two abstracts are listed under both Trubion Pharmaceuticals, Inc. and Facet Biotech Corporation, as the companies entered into a worldwide development and commercialization agreement for TRU-016.

Kinase Inhibitors

Inhibitors of intracellular kinases have the potential to be synergistic with several classes of chemotherapeutic and immunotherapeutic agents.  For example, different cancers have mutations on a few key kinases [such as PI3K], many of which lead to increased cellular growth, proliferation, angiogenesis, and survival.  In addition, many kinases have elevated expression levels or increased activity with several cancers.  Also, while antibodies may target one specific receptor, often multiple receptors are overactive in cancer cells; however, the different receptor signals may converge upon a central nodal signaling point making pharmacological intervention possible. 

Intracellular kinase inhibitors vary not only by their target [and isoform selectivity] but also by their inhibition mechanism.  For example, some small molecule inhibitors are ATP analogs, catalytic domain inhibitors, non-catalytic domain inhibitors, or target ligand inhibitors.  Some of the most studied intracellular kinases include PI3K, mTOR, AKT, SRC, JNK, and others.

One of the major drug development problems to date is that inhibition of one pathway leads to upregulation of a parallel signaling pathway.  It will be important for researchers to decipher the roles of redundant parallel pathways and feedback loops. Together, inhibition of the necessary intracellular signals needed for a cell to respond to external growth and survival factors have the potential to prevent further cancer growth. 

Due to significant interest in PI3K inhibitors, such as Keryx Biopharmaceuticals’ perifosine, we have also listed two private companies presenting Phase I clinical data at ASH.

Table 2. Kinase Inhibitor Presentations

Biologic Agents

Therapeutic applications of monoclonal antibodies [MAbs] are the most widely used form of immunotherapy for cancer at this time.  Examples of MAb mechanisms include prevention of ligand-receptor interaction, antibody dependent cellular cytotoxicity, complement mediated cytotoxicity, and immune modulation.  Most MAbs target cellular receptors that are overexpressed or specific to certain cancers.  New technology in MAbs has allowed for improved conjugations and increased penetration.

In view of significant interest in the area of MAbs, we have also included a private company presenting preclinical data demonstrating proof-of-concept at ASH with an IND planned for Q1 2010.

Table 3. Biologic Agent Presentations

Chemotherapeutics

Antimetabolites have well established anti-cancer profiles with actions on intermediary metabolism of proliferating cells.  The mechanism of action of antimetabolites is through the inhibition of nucleotide and nucleic acid synthesis.  Many of these drugs have delayed toxicity and are subject to drug resistance.  Examples of approved therapies include methotrexate, 5-FU, and more recently Allos Therapeutics’ Folotyn™ [pralatrexate injection]. 

Nucleoside analogues are similar in mechanism to alkylating agents.  Many nucleoside analogues kill cells by binding to DNA and forming strand breaks leading to an inhibition of DNA synthesis and function.  Nucleoside analogues are associated with nephrotoxicity but have shown to be synergistic with other therapies such as vinblastine.  Examples of approved nucleoside analogues include cisplatin and carboplatin.   In terms of development candidates, Cyclacel recently reported topline survival data from a Phase II study of its oral nucleoside analog, sapacitabine, in elderly patients aged 70 or older with either newly diagnosed acute myeloid leukemia [AML] or AML in first relapse.  The study was a three-arm, randomized trial evaluating three dosing schedules of sapacitabine.  The primary endpoint of one-year survival was approximately 30% in two out of the three schedules tested and further details of the study will be presented at ASH.

Histone deacetylase enzymes [HDACs] are a group of proteins that deacetylate lysine residues on core histones resulting in chromatin condensation and gene repression.  In addition, HDACs have been shown to inhibit transcription factors and interact with other proteins including p53 and c-myc.  There are three classes of HDACs each with unique domains and cellular expression profiles [and cancer expression profiles].  Thus, HDACs have a diverse and complex role in cellular activity.  HDAC inhibitors have shown to induce apoptosis, while it is not clear if HDAC specific or pan-HDAC inhibitors, such as Pharmacyclics’ PCI-24781, will have the best clinical outcome.   An example of an FDA approved HDAC inhibitor is Merck & Co.’s (MRK) Zolinza® [vorinostat].

Table 3. Chemotherapeutic Presentations

Others

In 2003, Velcade® [bortezomib] by Millennium Pharmaceuticals, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Company Limited, became the first proteasome inhibitor to be approved for use in the U.S.  Bortezomib disrupts normal protein homeostasis by targeting the proteasome, the final enzyme in the proteolysis cycle that is critical for normal protein turnover and homeostasis.  Proteasome inhibitors are linked with decreased NF-kappaB [NFkB] activity, which has been shown to be a central transcription factor involved with this disease.  In addition to NFkB, proteasome inhibition has other antitumor activity such as p53 stabilization.  Because the proteasome has been validated as a target for myeloma, other drugs, such as Onyx Pharmaceuticals’ carfilzomib, are in development with novel features such as decreased toxicity and increased potency.

In August 2009, Gentium S.p.A. announced top-line results from a Phase III trial designed to evaluate the safety and efficacy of 25 mg/kg/day of defibrotide, a deoxyribonucleic acid derivative derived from cow lung or porcine mucosa, for the treatment of severe veno-occlusive disease in hematopoietic stem cell transplant patients.  The results did not reach the protocol-specified levels of significance for the primary and secondary endpoints at 100 days.  The Company plans to present full results from the trial at ASH.

Table 4. Other Presentations

Summary

Stocks to watch at ASH by conference/presentation date:

Saturday, December 5, 2009: IMGN, FACT, CYCC, SNSS, TRBN, KERX, AEZS, ALTH

Sunday, December 6, 2009: IMGN, PCYC, SGEN

Monday, December 7, 2009: FACT, IMGN, ARIA*, TRBN, SNSS, GENT, PCYC, ONXX*, ALTH, SGEN

Tuesday, December 8, 2009: ALTH

* Company has announced plans to host an investor teleconference in connection with the ASH presentation(s)

Michael D. Becker, moderator and president and chief executive officer of MD Becker Partners, made a number of key points and observations in his opening remarks, beginning with some upbeat comments regarding the approximate 2,000-point rebound in the Dow Jones Industrial Average (DJIA) from its low in March 2009. He also indicated that some biotechnology companies have been able to successfully access the capital markets. Specifically, investors have been backing companies with later stage pipelines that have been executing on their milestones and have solid management. Examples of financing transactions cited at the time were Allos Therapeutics, Inc. (ALTH), Micromet, Inc. (MITI), and Seattle Genetics, Inc. (SGEN).

Mr. Becker also observed improving trends in clinical trial results and regulatory approvals, such as the recent Phase 3 results for a prostate cancer vaccine by Dendreon Corp. (DNDN) and the FDA approval of a schizophrenia product by Vanda Pharmaceuticals, Inc. (VNDA).

The roundtable session that followed was an open discussion for participants from diverse backgrounds to offer shared insights and perspectives on strategies to enhance visibility and access capital. There was general agreement among the expert panelists on five key principles that biotechnology companies may want to consider in order to not only survive – but thrive – in the current environment. Participants underscored the following:

1) Communicate simply, succinctly and consistently

Biotechnology companies would benefit by embracing Albert Einstein’s famous quote “nothing is so complex that it cannot be explained simply.” In contrast to direct communications with more sophisticated investors, press releases, informal pitches for media coverage, and other general communications are not times to showcase technical terms, acronyms, and professional jargon. In a complex industry, such as biotechnology, there is a delicate balance between providing the information simply and concisely while including key scientific data. “It helps to talk to somebody who understands the business of communication,” says James E. Dentzer, Chief Financial Officer at Amicus Therapeutics, Inc. (FOLD). “Walk them through your business model and ask them for advice.”

But be succinct. “I also get a lot of people who write a pitch where they start out with a paragraph of background – most of which I already know – and I’m still looking, “where is the news, where is the news?” says Linda A. Johnson, Health/Business Writer at The Associated Press. “The best thing you can do is at the top of your press release, which should be written in English, put three maybe four sentences summing up what your news is and why it’s important. That’s the way to get a reporter to pay attention.”

Consistency is also critical, especially taking into consideration how the internet has immortalized certain aspects of investor relations. People can go online and find a wealth of past and present information about a company.

2) Engage competent and experienced external advocates

In the current environment, businesses are faced with decreasing human and financial resources, which is increasing the strain on management’s limited time and attention. Outsourcing can help a company shift its focus from peripheral activities toward work that serves the underlying enterprise of the business, which in biotech is science. For smaller organizations, outsourcing can also help companies act “big” by giving them access to the same level of expertise that large companies enjoy.

Panelists agreed that competency and experience are key criteria to look for when a company is considering outsourcing – especially when it comes to handling investor or public relations. Look for a person or firm that brings the breadth of real-world, in-house experience necessary – expertise in financial, scientific, medical and communications – all operating within the legal parameters required. “I want someone who, when I ask questions, can actually answer them instead of having to say I’ll get back to you, I’ll find out, I’ll ask someone,” says Linda A. Johnson, Health/Business Writer at The Associated Press. “That’s wasting my time. So you need somebody who really knows their stuff and who is prepared.”

Cost-cutting may be another reason for companies to outsource. Outsourcing converts fixed costs into variable costs, releasing capital for investment elsewhere in the business. This may be especially important for early-stage companies.

3) Credibility and management experience

With the crisis in confidence, now more than ever companies need to establish personal relationships with the financial community. Investors are increasingly focused on credibility. Are you achieving milestones, are you putting out information in timely fashion, are you being forthright with your investors? “Once companies lose their credibility, whether it is data release or just over embellishing a situation, it’s very hard to get that credibility back,” says Michael A. Margolis, R.Ph., Managing Director at Merriman Curhan Ford (MERR).

Be upfront, be honest, and do not hide the bad stuff. “If somebody tries to slip something by, that does create a lasting memory and you will look at what they file a little more closely,” says John George, Biotechnology Staff Writer at the Philadelphia Business Journal.

Just how important is the credibility or experience of the management team in contrast to the science and the market opportunity? “I think we’re all going to say the same thing because it’s a very critical – it’s probably the most critical – aspect of the business,” says Todd C. Brady, M.D., Ph.D., Principal at Domain Associates.

4) Be proactive

Companies have different philosophies and different approaches to investor relations, with some viewing it as largely reactive – responding to inquiries from analysts or investors as they come in. “For companies, I think one thing to be very careful of though, is to keep in mind that investor relations has to be an active – not a passive – event,” says John W. Chambers, Managing Director at Merriman Curhan Ford (MERR). “The folks that have had a reasonable investor relations campaign that’s been in existence not just in the bad market – they’re not going in for the first time in this type of market to see someone – are getting an audience.”

In the current environment, another common mistake by companies is to reduce their investor relations activity or curtail outreach to the investment community. When competing for capital, however, a company must have the proper resources to distinguish itself in the market. The more a company makes investors aware of its existence, business, and strategies – the more likely it is to be rewarded with access to capital, potential partnerships, and a fair valuation.

The process of raising capital is much longer than companies are used to in the past where they could have raised money in a matter of days or weeks. In addition, it is unusual for investors to invest in a company after hearing the story for the first time. Accordingly, time and effort spent now to get in front of investors is time well spent.

5) Growing stronger through adversity

At the start of the year, MD Becker Partners provided a positive outlook for the biotechnology industry in 2009, citing the sector’s defensive characteristics, favorable technical aspects, and improving fundamentals, such as the number of new product approvals, products in clinical trials and the brisk pace of industry consolidation and licensing transactions. Some of the panelists agreed and even hinted at a stronger biotechnology industry going forward.

“If we’re going to weather the tsunami, I see the end kind of coming because you’re seeing fundamental investors that are willing to take meetings, they’re willing to see a differentiated story,” says John W. Chambers, Managing Director at Merriman Curhan Ford (MERR). “The type of investors that folks are targeting has changed while we’ve gone through this financial upheaval, but I think we’re on a very good track to create a stronger, fundamental driven and institutionally driven market place for life sciences once we get out the other end.”

“I would expect that we are going to see the market get better over time,” says James E. Dentzer, Chief Financial Officer at Amicus Therapeutics, Inc. (FOLD). “It’s not going to get better overnight, and it’s going to be led by people who are investing in companies they already know well.”

# # #

The roundtable was successful in producing valuable information and insights as well as suggestions for the future. Click here to request a complimentary electronic reprint of the 19-page “Successful Strategies for Raising Visibility and Capital” event transcript.

About MD Becker Partners LLC

MD Becker Partners is a boutique management and strategy consulting firm focusing on both public and private companies in emerging growth industries, such as pharmaceuticals, biotechnology, medical devices, and cleantech. The firm’s mission is to bring experience-based insights gleaned from the three independent disciplines of investor relations, strategic advisory and operational improvement together and apply them to carefully conceived and expertly enacted strategies that help companies increase visibility, unlock value and access resources to grow their business. For more information, visit the website: http://www.mdbpartners.com/