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Exploiting Connections and Navigating Bumps Along the Brain-Gut Axis

This article was originally published in Start Up

Executive Summary

The recent setback in SUI by Lilly's depression drug duloxetine may have implcations for a handful of biotech companies aiming to exploit their knowledge of the brain-gut axis to develop CNS drugs for IBS, OAB and other below-the-belt indications. Dynogen and Vela are two companies with promising products in the area.

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Dynogen Tries the SPAC Alternative

Special Purpose Acquisition Companies--SPACs--are springing up in the wide spaces abandoned by IPOs-- and they look tempting for those biotechs who can't get to a Big Pharma deal without first raising a big slug of money. That's Dynogen's problem: no deal until it can show solid efficacy from its two lead compounds. With no IPO or big private financing likely, Dynogen turned to a SPAC, a public shell company created to find a Dynogen-like opportunity. But SPAC investors can extract a big price for their cooperation-particularly in the current risk-averse public market.

Pharma's R&D Heartburn Spells Opportunity for GI-Focused Biotechs

Some Big Pharma have looked at the risk-reward equation for gastrointestinal R&D and they have opted out. But GI still represents a massive opportunity for Big Pharma, both in terms of its traditional primary care strengths and more recent forays into specialist medicine. This combination should open up new doors for GI-focused biotech players, several of which feel they can succeed where pharma has failed in tricky areas like IBS, with next generation drugs. Others have hitched their stars to commercially unvalidated targets, exploring new and potentially lucrative mechanisms of action.

Pharma's R&D Heartburn Spells Opportunity for GI-Focused Biotechs

Some Big Pharma have looked at the risk-reward equation for gastrointestinal R&D and they have opted out. But GI still represents a massive opportunity for Big Pharma, both in terms of its traditional primary care strengths and more recent forays into specialist medicine. This combination should open up new doors for GI-focused biotech players, several of which feel they can succeed where pharma has failed in tricky areas like IBS, with next generation drugs. Others have hitched their stars to commercially unvalidated targets, exploring new and potentially lucrative mechanisms of action.

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