Given the ongoing difficulties venture firms have funding themselves, the emphasis within the industry is on capital efficiency – in other words, finding mechanisms to cut the burn rate while building enough value to result in an exit that can return cash to investors at a three- or fourfold multiple. That's led a number of firms – and their venture backers – to make what a few years ago would have been a heretical decision: eschewing drug development in favor of cutting platform-related deals. Adimab LLC has been one of the most vocal start-ups promoting this admittedly cash-conscious model, but others are piling on, including newly minted Ablexis LLC, which in June 2010 raised a $12 million Series A from Pfizer Venture Investors and Third Rock Ventures. [See Deal] ( See "In The Midst Of A Shakeout, Biotech VCs Must Embrace New Partners, New Math," START-UP , September 2010 Also see "In the Midst Of A Shakeout, Biotech VCs Must Embrace New Partners, New Math" - Scrip, 1 September, 2010..)
Valuing Early-Stage Pharma Deals
The emphasis within the pharmaceutical industry right now is on capital efficiency. That's led a number of firms - and their venture backers - to make what a few years ago would have been a heretical decision: eschewing drug development in favor of cutting platform-related deals. And how have such deals been valued? An analysis by START-UP of average deal value from 2007 to 2010 for platform, preclinical and Phase I assets shows pharmaceutical licensers are approaching alliances with a "budget" mindset, with average deal values declining across all stages of drug development.
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