At the recent LeadingBiotech Europe CEO conference, Robert Cantone, Life Sciences Transactional Group Co-Chair and partner, participated in the panel, “Avoiding the Pitfalls in Pharma Partnerships & Deal Making.”
After the event, Robert shared the following conference insights in regard to what European biotech startups need to consider when looking to make deals in the U.S. market:
1. Understand how regulatory differences impact capital raising. In Europe, biotech’s access to private investment capital continues to be limited by regulatory restrictions on equity investments by certain categories of investors. Outside of fund-mandated restrictions, U.S. investment funds aren’t subject to similar legal limitations. For smaller biotech companies, that means capital in Europe is not always as available to them as it is in the U.S. market.
2. Once you’ve made the decision to enter the U.S. market, find advisors with specialized expertise that meet your transactional needs. For privately owned European biotechs, the U.S. market provides greater liquidity through U.S. stock exchanges. However, success is predicated on specificity and differentiating oneself within relevant sectors. To do so, many biotechs leverage advisors with expertise in helping companies stand out. Such specialists include investors and marketers, but also legal advisors.
Concentration and specialization is key, particularly when going public. With healthcare companies making up 42% of the 2018 IPO market by deal count—representing the highest percentage of any sector and with almost all coming from the biotech and biopharmaceutical subsectors—competition is fierce. Working with an advisor who understands how to shape your company’s story so that it is attractive to investors and generates excitement about the company is critical for long-term financial success.
3. Think big picture. For most small biotech companies, regardless of location, their primary focus is shepherding their drug through the approval process. While a critical and necessary milestone, biotechs shouldn’t overlook the value associated with the clinical data they’ve generated during the clinical trials process. In many cases, data can be as much of an asset as the drug itself.
This is for two reasons. First, the time is fast approaching when data sharing arrangements and platforms mean that biotechs will be able to monetize their data. Second, AI’s full potential in drug discovery is only a handful of years away. For biotechs, coding and archiving data for AI today means positioning yourself for the AI revolution in drug discovery tomorrow.