Germany’s undervalued biotech firms are starting to attract the attention of US and UK venture capitalists, according to Peter Heinrich, CEO of publicly-listed MediGene. “There are positive signals in the last few months," he suggests, that life may be returning to the sector, which has remained a biotech wasteland since the spectacular bust early this decade.
That was the last thing Germany needed—a country where the fate of one biotech can still strongly influence investors' appetite for the entire sector. But MediGene hopes it can provide a more positive counter-story (and reverse the apparently inexorable fall in its own share price).
Heinrich’s clear in his reasons for focusing downstream efforts on dermatology: it’s a niche area allowing for low-cost sales forces, Big Pharma isn’t interested, and there remain, he argues, plenty of US specialists who’ll need a European partner, despite recent consolidation in the sector (mentioned in this blog post).
MediGene’s dual-strand model is hardly new, though. Plenty of other European biotechs, especially in the UK, have been forced by risk-averse investors down this de-risked parallel-track route. The results have been mixed, as Vernalis’ recent collapse illustrates. Doing two things at once may appeal to investors in theory; in practice it’s hard to pull off.