July 30, 2009
Newly cash-flush biotech companies are sending a quick message to the market: Job seekers need not apply.
With venture capitalists and Wall Street wary of biotechs with unfocused cash burn rates, even the handful of companies that have captured cash in recent venture financings or licensing deals are only selectively adding new employees.
That represents a shift from the “what-me-worry” attitude many biotech leaders spouted when capital was readily available to finance the advancement of their drugs through clinical trials little more than two years ago.
Then the bottom fell out of the capital markets, and an estimated four in 10 biotech companies today have barely enough cash to survive into 2010.
Showing posts with label Banking/finance. Show all posts
Showing posts with label Banking/finance. Show all posts
Friday, November 06, 2009
Friday, October 30, 2009
Biotech startups feast at ancestors’ expense
June 5, 2009
One biotech’s garbage is another biotech’s treasure.
As life sciences companies close or pare operations, startups are finding high-priced equipment — in like-new condition — for pennies on the dollar.
For $30,000 — and, sometimes, the promise to scrub the floor behind them — Omniox Inc. has picked up $1.5 million worth of equipment from dead or dying biotechs that simply wanted to quickly off-load everything from a little-used centrifuge to protein purifiers.
The savings are significant for a five-month-old company funded by friends, family and a federal grant of $250,000.
“It’s the miracle of the downturn,” said Omniox founder Stephen Cary .
One biotech’s garbage is another biotech’s treasure.
As life sciences companies close or pare operations, startups are finding high-priced equipment — in like-new condition — for pennies on the dollar.
For $30,000 — and, sometimes, the promise to scrub the floor behind them — Omniox Inc. has picked up $1.5 million worth of equipment from dead or dying biotechs that simply wanted to quickly off-load everything from a little-used centrifuge to protein purifiers.
The savings are significant for a five-month-old company funded by friends, family and a federal grant of $250,000.
“It’s the miracle of the downturn,” said Omniox founder Stephen Cary .
Looming debt conversions put small biotechs in a pickle
Nov. 14, 2008
Biotechs bet big on debt. They lost.
Now, with stock prices in the pennies and low levels of cash, many biotech companies are staring at looming maturity dates on convertible debt notes. That debt is dogging their efforts to raise cash and, at worst, may force some into bankruptcy.
“What they’re trying to figure out is what they’re going to do about it,” said Steve Engle, CEO of Berkeley drug developer Xoma Ltd., which paid off its convertible debt investors last year.
Convertible debt generally gives the holder the option to get repaid in cash, or to convert the debt to stock equity at a specified time. Earlier in the decade, it was among the most popular fundraising mechanisms for biotechs, based on the long-term bet that the companies would use the money to develop blockbuster drugs, and see their stock prices soar as a result. But with those notes coming due, many biotechs don’t have the hoped-for drugs, repayment money or stock at a price that is tempting for investors.
Meanwhile, some of those investors face their own cash shortages. As a result, some are willing to negotiate repayment of far less than they are owed.
Biotechs bet big on debt. They lost.
Now, with stock prices in the pennies and low levels of cash, many biotech companies are staring at looming maturity dates on convertible debt notes. That debt is dogging their efforts to raise cash and, at worst, may force some into bankruptcy.
“What they’re trying to figure out is what they’re going to do about it,” said Steve Engle, CEO of Berkeley drug developer Xoma Ltd., which paid off its convertible debt investors last year.
Convertible debt generally gives the holder the option to get repaid in cash, or to convert the debt to stock equity at a specified time. Earlier in the decade, it was among the most popular fundraising mechanisms for biotechs, based on the long-term bet that the companies would use the money to develop blockbuster drugs, and see their stock prices soar as a result. But with those notes coming due, many biotechs don’t have the hoped-for drugs, repayment money or stock at a price that is tempting for investors.
Meanwhile, some of those investors face their own cash shortages. As a result, some are willing to negotiate repayment of far less than they are owed.
Life after Genentech: Kirk Raab re-engineers career as biotech mentor
July 11, 2008
The rehabilitation of Kirk Raab is complete.
Deposed as CEO of biotech giant Genentech Inc. in a conflict-of-interest affair more than a dozen years ago, Raab now is active in a handful of young, private biotech companies. He is a consultant, a been-there, done-that chairman or fill-in CEO. But mostly he's a mentor for the next generation of biotech executives.
"I help CEOs have less scar tissue than I do," he said.
Along the way, Raab has helped shape biotech success stories like Connetics Corp., the Palo Alto dermatology company that sold for $930 million in 2006, and up-and-coming ventures like sleep drug developer Transcept Pharmaceuticals Inc. of Point Richmond and East Coast hair regrowth startup Follica Inc.
He's been involved with more than 14 small biotech companies in all -- often in unpaid capacities. That's a long way from Raab's Genentech days.
The bottom line of bringing Raab on board is clear for young companies looking to make good impressions on would-be investors: Kirk Raab's name packs a punch and his connections open doors.
"He adds weight and credibility," said Chris Ehrlich, a partner at InterWest Partners and an investor in Transcept and Follica. "And when you go into discussions with larger companies, it's good to have him on your side."
The rehabilitation of Kirk Raab is complete.
Deposed as CEO of biotech giant Genentech Inc. in a conflict-of-interest affair more than a dozen years ago, Raab now is active in a handful of young, private biotech companies. He is a consultant, a been-there, done-that chairman or fill-in CEO. But mostly he's a mentor for the next generation of biotech executives.
"I help CEOs have less scar tissue than I do," he said.
Along the way, Raab has helped shape biotech success stories like Connetics Corp., the Palo Alto dermatology company that sold for $930 million in 2006, and up-and-coming ventures like sleep drug developer Transcept Pharmaceuticals Inc. of Point Richmond and East Coast hair regrowth startup Follica Inc.
He's been involved with more than 14 small biotech companies in all -- often in unpaid capacities. That's a long way from Raab's Genentech days.
The bottom line of bringing Raab on board is clear for young companies looking to make good impressions on would-be investors: Kirk Raab's name packs a punch and his connections open doors.
"He adds weight and credibility," said Chris Ehrlich, a partner at InterWest Partners and an investor in Transcept and Follica. "And when you go into discussions with larger companies, it's good to have him on your side."
Friday, October 09, 2009
Stakes are huge for Visa in series of legal card games
June 21, 2002
It may be everywhere you want to be, but Visa is finding itself in places it would rather not: Courtrooms from New York to Oakland, where legal battles threaten to rock the secretive credit card association to its core.
At stake for San Francisco-based Visa U.S.A. is its commanding market share of 51 percent and, potentially, billions of dollars in court-ordered payments.
But what's also at risk is the bedrock on which banks have built their huge credit-card businesses around Visa: the guarantee to consumers that any Visa-branded card would be accepted by the merchant on the other side of the counter.
While Visa's market share has long had the clout to keep both retailers and its member banks in line, cracks in that foundation are now showing in court. Chafing under the costs associated with some of Visa's cards, large retailers want to pick and choose which cards they accept.
Meanwhile, some of its own member banks may win the right to offer cards from its most feared rival: American Express.
And Visa's lucrative business of converting foreign purchases into dollar payments has come under fire in suits by consumers.
It may be everywhere you want to be, but Visa is finding itself in places it would rather not: Courtrooms from New York to Oakland, where legal battles threaten to rock the secretive credit card association to its core.
At stake for San Francisco-based Visa U.S.A. is its commanding market share of 51 percent and, potentially, billions of dollars in court-ordered payments.
But what's also at risk is the bedrock on which banks have built their huge credit-card businesses around Visa: the guarantee to consumers that any Visa-branded card would be accepted by the merchant on the other side of the counter.
While Visa's market share has long had the clout to keep both retailers and its member banks in line, cracks in that foundation are now showing in court. Chafing under the costs associated with some of Visa's cards, large retailers want to pick and choose which cards they accept.
Meanwhile, some of its own member banks may win the right to offer cards from its most feared rival: American Express.
And Visa's lucrative business of converting foreign purchases into dollar payments has come under fire in suits by consumers.
Surprise in East Palo Alto: Banks
March 24, 2000
Eager to step into a fast-growing city, and win points with regulators to boot, financial institutions are lining up to go where few banks have gone before: East Palo Alto.
That's right. The same East Palo Alto that was for years a veritable no-man's land for economic development, the East Palo Alto with the dubious distinction as 1992's murder capital of the country, the same East Palo Alto left bank-less for a dozen years.
But thanks to a handful of commercial, office and residential developments and a declining crime rate, the city is slowly shedding its old image. And financial institutions now are virtually climbing over each other to get in on the ground floor.
Eager to step into a fast-growing city, and win points with regulators to boot, financial institutions are lining up to go where few banks have gone before: East Palo Alto.
That's right. The same East Palo Alto that was for years a veritable no-man's land for economic development, the East Palo Alto with the dubious distinction as 1992's murder capital of the country, the same East Palo Alto left bank-less for a dozen years.
But thanks to a handful of commercial, office and residential developments and a declining crime rate, the city is slowly shedding its old image. And financial institutions now are virtually climbing over each other to get in on the ground floor.
Wells tries to snatch San Francisco purse
Feb. 4, 2000
Wells Fargo wants to steal away the city of San Francisco's bank accounts from rival Bank of America, and it's raiding BofA's executive suite to do it.
The bank has lured Jim Thompson -- who oversaw San Francisco's accounts at BofA -- to spearhead the effort. Since October, he has built a seven-person government and education banking division, most of them also BofA émigrés, to boost the bank's business with California municipalities.
Not coincidentally, Thompson's hiring comes at a time when BofA's long-standing contract with San Francisco seems ripe for the taking.
Wells Fargo wants to steal away the city of San Francisco's bank accounts from rival Bank of America, and it's raiding BofA's executive suite to do it.
The bank has lured Jim Thompson -- who oversaw San Francisco's accounts at BofA -- to spearhead the effort. Since October, he has built a seven-person government and education banking division, most of them also BofA émigrés, to boost the bank's business with California municipalities.
Not coincidentally, Thompson's hiring comes at a time when BofA's long-standing contract with San Francisco seems ripe for the taking.
Franklin unit rebuilds after 9/11 tragedy
Feb. 1, 2002
In a few seconds, Anne Tatlock's job turned from the daily grind of wealth management to a fight for the survival of Fiduciary Trust Co. International.
But five months after terrorists turned a jetliner into a fireball that swept through Fiduciary's World Trade Center headquarters -- leaving 87 employees among the nearly 2,900 dead -- the subsidiary of San Mateo-based Franklin Resources Inc. has quietly taken care of its own while rebuilding its business.
For Tatlock, Fiduciary's chairman and CEO, that's meant finding a new home for the firm, overseeing the recovery of computer files from a backup system, and keeping its ultra-rich clients on board while it navigates them through uncertain market conditions. It's also meant filling 87 key jobs -- among them a director of human resources, the chief corporate lawyer, a senior vice president and other vice presidents -- and providing assistance for those victims' families.
"Our goal was not to hire 87 exact people," Tatlock said, "because those people do not exist."
In a few seconds, Anne Tatlock's job turned from the daily grind of wealth management to a fight for the survival of Fiduciary Trust Co. International.
But five months after terrorists turned a jetliner into a fireball that swept through Fiduciary's World Trade Center headquarters -- leaving 87 employees among the nearly 2,900 dead -- the subsidiary of San Mateo-based Franklin Resources Inc. has quietly taken care of its own while rebuilding its business.
For Tatlock, Fiduciary's chairman and CEO, that's meant finding a new home for the firm, overseeing the recovery of computer files from a backup system, and keeping its ultra-rich clients on board while it navigates them through uncertain market conditions. It's also meant filling 87 key jobs -- among them a director of human resources, the chief corporate lawyer, a senior vice president and other vice presidents -- and providing assistance for those victims' families.
"Our goal was not to hire 87 exact people," Tatlock said, "because those people do not exist."
Wednesday, April 26, 2006
Past haunts founder of new thrift
March 31, 2000
A banker linked in court documents to questionable lending and accounting practices at two former Bay Area savings and loans in the 1970s and 1980s is leading a group that has applied to start a San Francisco thrift and loan.
Bruce Flanagan, who headed Pacific Coast Savings & Loan Association until federal regulators took control in 1988 and later sold its assets at a cost of $24 million to taxpayers, heads a group that wants to open Pacific First Bank by fall. The new institution is intended to serve small businesses in Haight-Ashbury, the Sunset and other nearby neighborhoods.
Prior to Pacific Coast, Flanagan led Civic Federal Savings and Loan Association, where government overseers claimed in court documents that he improperly inflated revenues.
Flanagan was never charged in connection with either institution and he denies the allegations.
A banker linked in court documents to questionable lending and accounting practices at two former Bay Area savings and loans in the 1970s and 1980s is leading a group that has applied to start a San Francisco thrift and loan.
Bruce Flanagan, who headed Pacific Coast Savings & Loan Association until federal regulators took control in 1988 and later sold its assets at a cost of $24 million to taxpayers, heads a group that wants to open Pacific First Bank by fall. The new institution is intended to serve small businesses in Haight-Ashbury, the Sunset and other nearby neighborhoods.
Prior to Pacific Coast, Flanagan led Civic Federal Savings and Loan Association, where government overseers claimed in court documents that he improperly inflated revenues.
Flanagan was never charged in connection with either institution and he denies the allegations.
Turning risks into rewards
Aug. 25, 2000
Like other wannabe business owners, Jon Thomas has watched whatever.com rake in millions without the promise of a profit. But when it comes to basic funding for basic businesses in this Silicon Valley island of poverty, capital is in short supply.
Yet that might be slowly changing, thanks to the sheer grit of teenagers like Jon and a grassroots effort spearheaded by Stanford law school grad Suzanne McKechnie Klahr.
Now 17 kids who a year ago were at risk of falling victim to all the stereotypes of poor, inner-city America stand ready to launch new businesses in a territory customarily dismissed by bankers and venture capitalists.
Like other wannabe business owners, Jon Thomas has watched whatever.com rake in millions without the promise of a profit. But when it comes to basic funding for basic businesses in this Silicon Valley island of poverty, capital is in short supply.
Yet that might be slowly changing, thanks to the sheer grit of teenagers like Jon and a grassroots effort spearheaded by Stanford law school grad Suzanne McKechnie Klahr.
Now 17 kids who a year ago were at risk of falling victim to all the stereotypes of poor, inner-city America stand ready to launch new businesses in a territory customarily dismissed by bankers and venture capitalists.
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