Drug Flow and Deal Flow

Biotech Investing Conference
November 5-6
Menlo Park, California

The news at this year's Biotech Investing confab will focus on Big Pharma companies, as they take a more active role in developing early-stage drugs. Several other new funding models will be explored, too. That means startups looking for sugar daddies now have more alternatives than a peptide micro-array (that's a joke for the biotech nerds).

Name-Brand Incubators
Both Pfizer and Biogen-Idec will be talking up their new incubators that reach out to earlier-stage companies in need of development help. Under Biogen's "bi3" deal, scientists move into its Cambridge, Massachusetts, lab and spend two to three years trying to create a drug. They also get business and financial support, and access to Biogen scientists and equipment. The goal: to lay claim to overlooked discoveries and find promising concepts first. "To wait for the venture community to find the good ideas means that we are a passive player in that process," says Jeff Behrens, who runs new ventures for Biogen-Idec.

Venture Philanthropy
The snowballing movement of nonprofit groups that target specific diseases and invest in drugs to treat them will be a big player at the event. The Cystic Fibrosis Foundation will be on hand, as will Deborah Brooks, CEO of the Michael J. Fox Foundation (Parkinson's disease). Attendees will openly debate whether nonprofits should take over the risky role of financing drugs that haven't reached clinical trials. This past summer, CFF signed a $22 million deal with FoldRx Pharmaceuticals to advance preclinical research into treatments for diseases caused by the "misfolding" of cell proteins.

Venture Capital's Role
As alternatives blossom, traditional funding sources will discuss how to stay relevant-and preach caution. "We explore different ways of advancing drug development," says Mark Kessel, managing director of Symphony Capital, a New York private-equity firm, "so companies aren't giving up their birthright to Big Pharma." The intriguing biotechs on hand—such as Altus Pharmaceuticals (working on a possible kidney-stone treatment) and Plexxikon (which has early-stage drugs for everything from diabetes to melanomas)—better start working on a cure for impatience, or at least volatility.

A version of this article appeared in the November 2007 issue of Fast Company magazine.