Germany’s undervalued biotech firms are starting to attract the attention of US and UK venture capitalists, according to Peter Heinrich, CEO of publicly-listed MediGene. “There are positive signals in the last few months," he suggests, that life may be returning to the sector, which has remained a biotech wasteland since the spectacular bust early this decade.Or maybe not quite a wasteland: rich individuals and families such as that of Dietmar Hopp have to some extent filled the gap left by most VCs in the last couple of years. But the Hopps have been stung too—not least by GPC Biotech’s crash and burn following poor Phase III results of prostate cancer drug satraplatin last fall.
That was the last thing Germany needed—a country where the fate of one biotech can still strongly influence investors' appetite for the entire sector. But MediGene hopes it can provide a more positive counter-story (and reverse the apparently inexorable fall in its own share price).
That was the last thing Germany needed—a country where the fate of one biotech can still strongly influence investors' appetite for the entire sector. But MediGene hopes it can provide a more positive counter-story (and reverse the apparently inexorable fall in its own share price).
Already, it claims to be the first German biotech with products that have actually reached the market (Eligard is sold by Astellas for prostate cancer; Veregen was recently launched in the US by partner Bradley (now Nycomed) for genital warts). And this year, the biotech hopes to join in the marketing game itself, with plans to build its own dermatology-focused sales force in Europe.
But no, insists Heinrich, we're not going spec-pharma. MediGene is also maintaining R&D investment in oncology and auto-immune disorders, with data expected shortly from late-stage programs. “Ours is a dual model, allowing investors the upside of late-stage, in-house programs” with the protection against downside risk provided by revenues from marketed drugs, he summarizes.
Heinrich’s clear in his reasons for focusing downstream efforts on dermatology: it’s a niche area allowing for low-cost sales forces, Big Pharma isn’t interested, and there remain, he argues, plenty of US specialists who’ll need a European partner, despite recent consolidation in the sector (mentioned in this blog post).
MediGene’s dual-strand model is hardly new, though. Plenty of other European biotechs, especially in the UK, have been forced by risk-averse investors down this de-risked parallel-track route. The results have been mixed, as Vernalis’ recent collapse illustrates. Doing two things at once may appeal to investors in theory; in practice it’s hard to pull off.
Heinrich’s clear in his reasons for focusing downstream efforts on dermatology: it’s a niche area allowing for low-cost sales forces, Big Pharma isn’t interested, and there remain, he argues, plenty of US specialists who’ll need a European partner, despite recent consolidation in the sector (mentioned in this blog post).
MediGene’s dual-strand model is hardly new, though. Plenty of other European biotechs, especially in the UK, have been forced by risk-averse investors down this de-risked parallel-track route. The results have been mixed, as Vernalis’ recent collapse illustrates. Doing two things at once may appeal to investors in theory; in practice it’s hard to pull off.
So long as MediGene struggles to revive confidence in the sector, though, Germany should remain a bargain-hunter's hot-spot.
