Ann Arbor life sciences companies consider alternative revenue options
For most early-stage biotech companies, revenue is but a far-off dream. They rely mostly on investors’ cash or government funding until they’re advanced enough to market a drug or sign licensing deals with major pharmaceutical companies.
But the global economic crisis, which has caused investors to scale back on funding new companies, is causing some biotech startups to consider alternative means of revenue.
“They have to be really strategically planning their R&D plans and trying to figure out how they can develop revenue streams that take advantage of their existing technologies and pipelines,” said Stephen Rapundalo, executive director of Ann Arbor-basedÂ MichBio, the state’s life sciences association, whoseÂ annual conferenceÂ starts today in Kalamazoo.
Â “It can begin to give them revenue, but at the same time give some needed data and milestones that can impact their true.”
Take Esperion Therapeutics, for example. The Plymouth Township-based firm, led by Lipitor co-discoverer and Ann Arbor scientist Roger Newton, plans to broaden its technology focus to include quick-to-market “nutraceuticals.”
Newton said natural health products, often referred to as dietary supplements, could supply a steady stream of revenue while Esperion pursues the costlier clinical development process for its leading cholesterol drug candidate.
Nutraceuticals are not as tightly regulated as prescription drugs. And they can be produced for a fraction of the cost of FDA-approved drugs, which can take $1 billion and 20 years to develop.
Newton said nutraceuticals could provide “non-dilutive revenue” - that is, funds that don’t require Esperion to give up an ownership stake to investors. The new product push even prompted Esperion to change its slogan from "pathways to new medicines" to "pathways to better health," Newton said.
At least one other life sciences company, Velcura Therapeutics, is also pursuing alternatives for its technology.
Velcura has formed a spinoff company called FreeStride Therapeutics to develop its bone density technology to treat horses.
The move comes as Velcura has struggled to raise venture capital in a brutal funding environment, a common experience for entrepreneurs right now.
Rapundalo said he hasn’t identified a life sciences rush to explore quick revenue options for existing technology or know-how.
“I think people are starting up and realizing that they can’t put all their eggs in one basket,” Rapundalo said.