How to Stop the “Valley of Death” From Getting Deeper

1 Apr

By Danielle Silva, Director of Research, LSN

In the life sciences space, most scientific breakthroughs fail to translate into commercial product. There are many forces behind this trend, including regulatory issues and many emerging scientist-executives’ lack of business acumen. The largest issue, however, is that many emerging biotechs are unable to obtain the necessary funding to move an early stage research project down the pipeline towards market. This gap, which continues to widen, has become known in the industry as “The Valley of Death.”

LSN maintains a focus on the Valley of Death, because it is chiefly an issue stemming from an inability to make the right connections with investors, rather than a problem with the fundamental science behind an early stage asset. As we’ve discussed previously, in recent years, LSN has seen traditional sources of capital for scientists and young stage life sciences firms, such as venture capital funds, all but dry up. That means there is even more competition to get a meeting with these investors, and because these investors are becoming more risk averse often times the firm with a less disruptive, but later stage product will be the winner, not the scientist with the novel discovery.

So what can the life sciences industry as a whole do to prevent the valley of death from getting wider? Quite simply, there needs to be a forum for early stage scientists to engage with the new sources of capital in the space. In today’s environment, it’s really all about targeting the family offices seeking to contribute money to accelerate research for a specific indication. All of the pieces are in place for a completely new paradigm of philanthropically-driven private capital pushing the next generation of drugs to market. The key to this will be in creating an environment for both parties to engage face to face collaboration towards a common goal.

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