The Relationship Between the Capital Markets and Biotech?

Marty Makary is reportedly out as head of FDA. This comes during a turbulent time for health agencies in the US government. Since coming into power last year, the current administration has made significant changes to leadership roles, with entire committees being removed and replaced.

Pharmaceutical Executive recently spoke with author Dr. Jeremy Levin, who’s promoting his new book Biotech in the Balance: Saving a Strategic Industry in an Age of Distrust. During the conversation, he discussed issues caused by current leadership, along with other problems that have been developing for years.

According to him, the industry must address its relationship with the capital markets, address misinformation issues, and push back against the politicization of medical research and development.

Pharmaceutical Executive: What is the relationship between the capital markets and biotech?
Jeremy Levin: The capital markets and biotech are actually completely mismatched. Biotech grew out of a group of amazing individuals, Herb Boyer and others, out in California in 1973, then moving on to found Genentech and meeting a venture capitalist and taking a huge chance, a tiny little step right at the birth of the industry.

Now we fast forward. We have many thousands of companies, totally, about 1000 who are really of consequence and size. But the one thing that has happened is they've simply grown up in a capital market that was never designed for them. The capital markets and the legislation didn't see this as a national strategic asset. It was just another piece of stock to be traded in the capital markets, just like any other.

The difference is the timescale. The timescale from taking a risk in a private company through to finding a medicine is a 10 year period. There are very few other products that look like that.

Furthermore, if you're in the the digital world, you can launch your product after a couple years. And if it needs to be tweaked, you tweak it so the capital markets can adjust with that, and it's all about sales.

In biotech, if your science is slightly wrong, if your clinical trial needs to be thought through again, you are punished unmercifully, and what happens is the stock collapses around you. There are many things that could have been done if there had been a policy adopted and a clear strategic recognition of what biotech does for the United States and for the rest of us. After all, we produce 70% of all the medicines that large farmer sells. This is an extraordinary figure.