Thursday, February 5, 2009

Experts offer survival strategies at MHT BioForum

By Marc Songini

With the market for initial public offerings dead and the economy tanking, there are still a few ways for biotech companies to get funds and get by until things improve.

Those strategies include declaring bankruptcy, seriously cutting back spending, doing private financing, mergers and acquisition, and other methods, according to experts speaking at the Mass High Tech 7th annual BioForum, held today at the Westin-Copley Place hotel. The event was billed as “Survival Strategies” and featured life sciences and venture capital executives. 

A couple of participants reiterated that it’s currently a gloomy environment for an IPO. “After 2000, the market for IPOs collapsed,” noted Douglas Fambrough, general partner at Waltham-based venture capital firm Oxford Bioscience Partners LP. On the other hand, he’s seen an uptick in the number of private companies doing mergers and acquisitions, although such a transaction requires a great deal of work to plan for. On the bright side, many private venture capital funds are nevertheless “open for business,” with money to invest, he said. “People are still excited about a new technology and building a new company that can change the world,” said Fambrough.

The expected multibillion-dollar stimulus package in the U.S. Congress has the chance to deliver a boost to local startups by way of grants, noted Robert Urban, a panelist and an executive director at the Koch Institute for Integrative Cancer Research at MIT. “I hope that it will happen quickly,” he said. He also noted that private foundations, such as the Michael J. Fox Foundation for Parkinson’s Disease, are also potential sources of cash to fund companies.

Also, avoiding going public has its advantages in terms of cost cutting, noted panelist Albert Luderer, president and CEO of Woburn-based biotech company BioTrove Inc. The company withdrew its IPO filing in 2008, because of poor market conditions. “We’re the poster child for the failed IPO,” joked Luderer. There are a number of expenses that are incurred when going public, he noted. “Our legal bills have gone down,” he said. Nevertheless, the company is doing very well, and currently closing a private funding round. It also continues to increase its revenues, doubling its top line this past year, said Luderer.

Besides bridge loans, mergers and acquisitions, angel funding, and grants, there remain more radical tools, such as massive layoffs or even, when applicable, Chapter 11-style bankruptcy, noted the panel.