I couldn’t believe it either.

A really good article released from GEN (Genetic Engineering and Biotechnology News) underscores an emerging trend in pharma pre-seed gap funding investment in R&D as an answer  to a retraction of early stage VC from biotech and pharma sectors. One issue, how can you have a conversation about “Drugs” +”R&D”+”external partnerships” + “capital  valley of death” and not mention the collaboration with research universities?!. It befuddles (always wanted to use that word) my mind.  It was clearly an oversight in the complexity of the moment so I will append with  a few words how this trend might intersect with research universities/gap funding.

First there are strong relationship forces at play between BioPharma and universities:

  • A movement of internal R&D into external partnerships with research universities and labs, especially in development intensive technologies (NSF S&E Indicators)
  • Universities are a major source of the research behind every “cuetical” and “tic”
  • Universities are growing more receptive to external collaborations as they must creatively sustain/grow budgets, and offer new learning opportunities to students and faculty
  • Capability :Academic brains, research facilities, gap funding meet industry minds, development relationships, and market experience
  • The release of blockbuster drug is a lasting incentive to both sides…and could mean a lot of money

As this trend continues, expect biopharma to launch creative partnering and gap funding strategies. Most of these funds to be managed internally or through investment groups with strong university affiliations (For example,  Merck announced an investment partnership with Cambridge (ok one article mention) Flagship Ventures.

From our perspective, it will be interesting to observe and report on exactly “how” and “where” these companies decided to apply their funds. Which of them will step up with a well orchestrated gap funding approach that addresses the entirety of the capital gap from translational research to proof of concept to seed funding? Could these funds be positioned at multiple administrative levels of the university, for instance both the tech transfer unity and a research center fund? Will these companies go beyond the capital to harness the near- and long-term benefits of the partnership that go beyond the R&D itself like partnered accelerator/incubator programs and creative incorporation of student/faculty programs?

One thing is for certain, the universities should (and already are) get agressive in position themselves for this funding. If you are already positioned in a Pilltropolis or have a trackrecord of successful pharma/life-science commercialization,  you are probably good. However, for those of you that want to make a move into this game, here are a few ideas:

 

How many of you are engaged in either a gap funding or partnered program with BioPharma? Share your experiences and tell us about your relationship in the discussion section below.

A note from Jacob Johnson, founder, innovosource