Best of the Blog: START-UP May/June 2009
This article was originally published in Start Up
Our favorite blog posts from May and June related to stories not covered elsewhere in this issue of Start-Up.
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Not satisfied with its R&D experiments to date, GSK has taken its most radical step yet toward re-creating biotech within its walls: even smaller units complete with investment boards occupied by external VCs and CEOs and milestone-based funding and external VCs.
Roughly one week after GlaxoSmithKline gave Vitae Pharmaceuticals back rights to its renin inhibitor, the biotech signed a $13 million loan deal with Silicon Valley Bank and Oxford Finance, providing a cash runway at least into 2010. The cash lifeline was relatively small in dollar value but significant for even happening in the first place. The hard economic times have all but shut down the venture capital supply, leaving serious questions about money strategies for other biotechs.
In a product-oriented world, most biotechs learn to de-emphasize discovery, or even abandon it, in favor of in-licensing-as Vitae appeared to do when it in-licensed a series of molecules from Allergan. But Vitae's recent discovery-stage deal with GlaxoSmithkline, and the follow-on financing that followed it, shows that high-value small-molecule discovery deals can happen and provide valuation increases. But it's the very unusual company that can afford to focus its business entirely on them.