an Innovative Financing Alternative for Mid-Stage Biotech
KSM '07 and Scott Orn KSM '07,
companies struggle with declining new product yields for
a host of reasons, Biotechnology companies have become the
major innovation drivers in the drug development industry.
Large, profitable Biotechs can fund their own research and
development and are well positioned to maintain their new
product development pace. At the same time, startups can
attract funding because they are founded on the most exciting
new technologies and venture investors are willing to invest
multiple times and be patient with the companies because
the low valuation they are investing at means the returns
will still be strong if the company makes significant progress.
In between these two groups lie the Mid-Stage Biotechnology
firms, which lack the support of venture investors because
they are trying to exit the investment, yet don’t
have the profit streams to sustain investment. This paper
evaluates an innovative financing alternative for these
companies and it is our belief that such a model will become
an important source of capital for many Mid-Stage Biotechs
in the coming years.