The New Normal for Biotech Startups
Summary
With shrinking operating margins, patent expirations, a paucity of new product launches, significant reimbursement pressure, and an unpredictable regulatory environment—Big Pharma’s high risk bets on early stage biotechs of the past decade look cavalier through the lens of the current market environment.In its latest efforts, pharma seems to be trying to sidestep the richly priced acquisitions and licensing deals of previous years by cutting out the middle market and going directly to the source – with a recent trend for generously funded research collaborations being doled out to top tier universities.So on a risk-adjusted basis, the return profile of the single asset LLC model makes good sense for a growing number of investors with the flexibility to invest in these structures.The structure is also very motivating to founders and development teams since there is a real possibility of retaining undiluted equity ownership and reaching membership distributions of licensing revenue in the near term.With these principles in mind, we have recently founded Resolve Therapeutics, LLC and have begun work on a compound sourced from the University of Washington, discovered by researchers and scientific co-founders Keith Elkon and Jeff Ledbetter.