Exelixis Pharmaceuticals Inc.'s acquisition of its Artemis Pharmaceuticals GMBH affiliate makes strategic sense. But the bargain price paid sends a clear and frightening signal to investors in German start-ups: the real values of some of these companies--even some of those with the highest profiles--may be approaching fire-sale levels.

It is tempting during these dark days of the US biotech industry to contemplate establishing a presence in Europe, particularly Germany. The principal lure is funding. A typical German funding package for a US biotech could include a matching grant of $3 million by a German federal agency, alongside a $3 million investment by a German VC fund, as well as another $3 million in state and regional money.

A teutonic wave of biotech start-ups is gathering, fed by government money, new venture funds and a handful of academics. But given the cultural and managerial obstacles, it's not certain that this wave will have the energy to reach the shore.