Experts are sounding the alarm that something is wrong about the tilted biotech investing trend. When investors choose to focus more on late-stage biotech projects because of the lower risks, early-stage projects are left without enough funding, a step that is hurting innovation. According to industry pundits, there may be millions of people with life-threatening medical conditions in the next few years if more funds are not channeled to innovation.
Already the world is worried about climate change and Iran’s nuclear power, but an even greater threat is a world with millions of baby-boomers who are demented. According to Jonathan Fleming, an investor and medical researcher, the Great Recession set back the U.S. health sector. Investment trend has shifted in manner that suggests that treatment for diseases such as Alzheimer’s may not be possible even five years from now.
Investors are somehow shunning life science projects and if they invest in biotech they are willing to put their money in companies with late-stage projects. The concern is that early-stage projects come with a higher price tag and the risks are more. The software world is particularly winning more investment because of favorable regulatory environment and the ability to make money.
Data shows that early-stage life science startups had most of the venture capital funding back in 2009. However, by 2014, things had changed considerably that the opposite of the situation in 2009 was now true.
Angel investor step in
Without adequate funding from the private sector, especial from venture capitalists, angel investors are stepping in to foster life science innovation. Angel investors are wealthy individuals that come out to mentor and fund emerging companies. Of course, angel investors step in when the venture looks too risky for other investors to put their money. Tyler Willis of Involver and Milena Adamian of Life Science Angel Network are some of the life science angels.
Large biotech also support early-stage ventures
Big pharmaceutical companies, desperate to bring new products to market to as their blockbusters lose patents, have also established venture arms to back early-stage life science startups. In some case, especially where an early-stage startup show more promise, the Big Pharma do not hesitate to push for merger.
While the Great Recessions has led to what experts believe to be a dangerous biotech investing trend, history shows that great returns have always come from the sectors that most people tend to avoid or ignore.