{ 15 DECEMBER 2009 }


Rediscovery of success




New technologies, new methods of treatment, and new business models – after years of crisis the biotech industry is on its way to a spectacular comeback, made possible by returning to its main virtue: innovative strength.

At first glance, the global biotech industry has been weathering the economic and financial crisis rather well. In 2008, revenues rose by 12 percent to some $65 billion, mainly thanks to the growing demand for new therapeutics and the increasing importance of biologicals. Upon closer look, though, the underlying crisis of this industry – an industry pampered by success over many years – can be seen. In a climate of restricted access to capital, start-ups are struggling for survival as their dire financing needs go unmet by investors whose appetite for high-risk investments has fallen precipitously. Plus, the IPO window has been essentially closed since late 2007. Even the more mature companies have had to learn to cope with very tight budgets. At the same time many of them have faced a number of setbacks as product candidates have failed in clinical Phase II or III trials, further delaying development timelines. And even when these drug candidates were finally approved by regulatory authorities, they were launched in an environment that increasingly questioned their clinical utility on the one hand and saw high costs for typically small groups of patients on the other.

In such a challenging environment, the biotech industry has been forced to reinvent itself to a large extent. The new biotech industry is characterized by leaner, market-driven organizations and a focus on innovation at all levels – from drug development to business model. A great example of this new breed of biotech companies is Swiss-based Evolva. The company has

• a new, more efficient approach to drug discovery that generates a highly
innovative proprietary pipeline of product candidates

• a flexible business model combining partnerships with its own development

• an intelligent financing strategy

Genetic chemistry will create new
opportunities in drug discovery

Further upside from drug development

An intelligent financing strategy

The financial crisis and the resulting shortage of capital have forced biotech companies to review the pillars of their strategy and to explore alternative ways of raising money. With its most recent financing round, Evolva has become a frontrunner in creative financing strategies. The company initially made a private placement with a group of specialized venture capital firms, including co-lead investor Wellington Partners, and subsequently agreed on a merger with the listed company Arpida, also located in Basel, Switzerland. Arpida had failed to bring its own product candidates through regulatory approval, but still retained a considerable amount of money.

Evolva brings its genetic chemistry platform, an attractive product pipeline, several collaborations – including the one with DTRA – and an experienced management team to the merger. This win-win situation has been acknowledged by Arpida shareholders. Immediately after the announcement of the merger, Arpida’s market cap significantly increased at high trading volumes.

Growth path for the biotech industry

Considering biotech´s new approaches to drug discovery, its targeted and effective therapeutic products and its new financing models, along with the unmet medical needs of millions of patients around the globe, it becomes evident that the future of the biotech industry has just begun. In the next five years, it is expected that its revenues will rise by at least 50% to more than €100 billion. This provides enough growth potential to convince investors to once again back the most promising technologies, product candidates and management teams; and enough growth potential to bring about a great future for recession-resistant companies like Evolva and immatics.