European science is showing early signs of translational growth, with VCs increasingly shifting their focus to preclinical assets. But investors are concerned the region still doesn’t have the supply of management talent or funding it needs to take early stage companies through development, which is what it will take to really boost the ecosystem.
The onus is on players across the spectrum, including investors, entrepreneurs and academic leaders, to capitalize on the momentum.
The key is both to make sure the right companies get funded and that investors have the right expectations. That means culling newcos early, providing more than drip funding to enable the necessary experiments to be done, and creating incentives to attract seasoned management teams.
“We are actually getting there,” said Antoine Papiernik, partner at Sofinnova Partners. “There are companies being funded with the right amount of money to do an ambitious plan. But the valley of death isn’t there anymore, it’s in the later stages.”
Nine European investors, CEOs and academic leaders who spoke with BioCentury were unanimous that the shift to early stage investing is palpable, and reflects seeds of change among researchers, who are becoming more commercially minded.
However, several stumbling blocks can still halt progress.
While scientists are becoming more entrepreneurial, it remains a challenge to build robust teams of experienced management.
According to François Thomas, president and managing partner of INSERM Transfer Initiative (ITI), more people in France are now inclined to start their own company rather than join a large one like Sanofi. “There’s a change in mentality,” he told BioCentury. “What could be an issue is that there’s a dearth of seasoned biotech executives and serial entrepreneurs -- there are not crowds of people you can find.”
At this year’s BioEquity Europe panel on translational science, Novo Seeds partner Stephan Christgau said he worries about the “legions of walking-dead companies” in Europe, which continue to exist because of a reluctance to kill projects and companies when needed. The problem is that the flood of moribund companies can turn off overseas investors, who need to expend extra effort picking out the jewels worth investing in. Novo Seeds is the early investment arm of Novo A/S.
Christgau told BioCentury another issue is that while he welcomes the influx of money for early assets, the expectations aren’t always properly aligned. He said funds that shift from late to early often bring the wrong set of priorities and the wrong talent base. “A management team for a Phase II isn’t always relevant to early stage,” he said.
Still, several initiatives are under way to boost those skills and create structures that foster interactions between industry scientists and entrepreneurial-minded academics. Their task is to create a new crop of companies that are not only based on innovative science -- a factor most agree Europe continues to produce in abundance -- but that can compete globally in a commercial setting.
“The real challenge for Europe is that pre- or even post-IPO, those