Thursday, September 24, 2009

PSA: Faster Than a Speeding NYC Cab, More Powerful than a Corporate Venture Fund

We got those kozmik post-Pharmaceutical Strategic Alliances blues again, mama, moving from our jam-packed coffee-and-schmooze-fueled confab in a charming old jewel of a Broadway theater near Times Square to the air-conditioned, seventh-floor hum of an office park in suburban Washington.

A bit of a letdown, really, though we acknowledge New York couldn't have handled PSA and the U.N. General Assembly all at once. We had to get out of town, fast.

So fast, in fact, that IN VIVO Blog is just now sorting through our copious notes on the second half of the conference. We've got plenty to pass along so, unlike our old pal Moammar Khaddafi, we'll get right to the point, and we promise you won't need simultaneous translation.

* The big takeaway from Wednesday's corporate venture panel was that CV funds have grabbed a more prominent role as the recession wears on. (What? It's over?)

Moderator and top Leerink Swann i-banker Tony Gibney noted that startups with corporate venture backers were more likely to get higher returns from M&A exits, especially if they had two or more corporates as investors. (Our colleague Ellen Licking had the lowdown in May's Start-Up.)

The one traditional VC on the panel was quick to give his corporate peers props: "We've definitely pulled back," said Jamie Topper of Frazier Healthcare Ventures in Seattle. "The financial risks have been very high lately, and the corporates have filled the gap and served the industry well."

Johnson & Johnson Development Corp. VP Asish Xavier said in the last 18 months his fund has even "played nice" and bailed out funds in its syndicate that haven't been able to pay their pro-ratas. Gibney said the corporate venture stance has quickly gone from "last passive one in" to aggressively forming companies and leading rounds.

Merck Serono sent Vincent Aurentz to talk up its new $54 million fund, launched in March. The fund bucks the general practice of keeping a firewall between the venture team and corporate R&D. Merck Serono is out to sniff out early-stage research for license or acquisition, said Aurentz: "We compare it to how much we would spend if we were to do this with internal research."

With one investment on its ledger so far, it's hard to say if the different approach will hamstring its efforts to woo startups into its portfolio, but other panelists took pains to emphasize the importance of keeping venture and corporate sides separate. Lauren Silverman of the Novartis Option Fund called her fund's firewall "strict," while Michael Diem of GlaxoSmithKline's SR One called his "serious." Asish Xavier said JJDC has a full-time employee to make sure the only information about its portfolio companies it passes along to J&J is already in the public domain.

* The final panel Wednesday discussed Big Pharma's sudden willingness to outlicense molecules that would otherwise sit on the shelf. Pfizer's Michael Clark, pinch-hitting for outlicensing chief David Rosen who was doing his civic duty as juror, noted the Esperion and RaQualia deals under its belt and promised that we'll see "a few more" deals by end of year. Eli Lilly's Gino Santini sang the praises of Lilly's Chorus project, the quasi-external development group that's supposed to move molecules to proof-of-concept faster than Lilly's main R&D organization. The goal, said Santini, is to have 50% of Lilly's pipeline eventually moving through Chorus.

But making Chorus bigger would ruin its nimbleness, so Lilly has a solution: Clone it. Santini didn't say when, but Chorus II and III are slated for "India and Indy." Hell, while you're at it, why not Indio? Or Indiahoma? OK? OK!

There are more juicy nuggets from PSA, but unless we cloned ourselves we'll miss the Nationals' 100th loss, not to mention the half-smokes and Gifford's double-dip. Check back with us tomorrow.

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