Beer is Biotech
An interview with Larry R. Bush, Ph.D., MBA and president of BioPartners, Inc.
When did angel investors start becoming interested in biotech?
The glib answer is hundreds of years ago when someone realized the huge commercial potential of mass-producing beer and spirits using fermentation techniques. After all, fermentation technology falls under the rubric of “biotech.”
More to point of this discussion, it calls to mind a pivotal meeting between Robert Swanson and Herbert Boyer, a world-famous molecular biologist at UCSF. Swanson, a graduate of the MIT Sloan School of Management and then with the San Francisco VC firm of Kleinman, Perkins, Caufield and Byers, could be considered an angel investor since, he ponied up personal funds to launch Genentech, regarded as the first biotech company and the second largest in terms of earnings, behind Amgen.
It’s probably fair to say that, in general, investment by angel investors in biotech has roughly paralleled that of VC over the past 30 years. Thus, angel investors have been players in biotech investing since the late 70’s.
But let me refine that answer even further. I would say that angel investors started to really get involved heavily in biotech in the mid-to-late 1980’s, when they witnessed Amgen’s ascendancy to the pinnacle of biotechnology, thanks to their development of biotechnology’s first real blockbuster, erythropoietin (“EPO”), the red blood cell-boosting hormone, co-marketed with Johnson & Johnson as Procrit® and Epogen.® Until then, companies like Amgen, Genentech, and Biogen and their platform technologies were regarded in many quarters – big pharma included - as follies.
I would conclude by pointing out that angel investors, by virtue of the niche they occupy in the investing arena, are understandably wary of investing in [bio]pharmaceuticals because these endeavors are so capital-intensive and involve painfully long product cycle periods, often as long as 10 years (from conception to FDA approval).