Biotech Investing
Anyone has any experience on biotech/life sci investing in VC/PE firms. Do you think this is a promising area to be an investor in given the headwinds: IRA, drug pricing regulations, harder and harder to make drugs? What are comps like in top firms: BX life sci, Bain Cap Life sci, RA, Orbimed, etc... Thanks!
Interested as well. Also curious about if this is worthwhile without an advanced scientific degree (i.e., MD / PHD)
At the firms listed above, yes, you will almost certainly not get a look if you don’t get an advanced degree. Some exceptions to that but seems to be the norm. No data to back this up but I feel like you also see a lot more laterals from corporates to buy side in biotech compared to other industries.
Terrible pay, slow career progression, prestige focused (PhD, MD from ivy league)
I have a PhD in computational biology and has briefed worked in biotech buyside during grad school. Can you expand more on why you think this is the case. Always thought buy side pays well in biotech and has similar pay relative to general investing (e.g. BX life sci = BX PE). However, I have limited experience outside of biotech and would love any insights from the more senior folks here
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I mainly play on the biotech public side but have invested privately in the past and still have connections in the space (and talk to allocators a lot about private investing).
It will still be a very profitable business model BUT the delineation between those who do it well and those who were along the ride when markets were very frothy will soon be apparent. Yes, there are headwinds but there are ALWAYS headwinds and the best platforms and drugs will be valuable provided our economy doesn't entirely collapse.
The most important thing you need to understand is that many of these VC funds have not yet marked down their losses since the markets turned in February 2021. One of two things will happen. Either everything will be fine and dandy in the overall market and biotech/equities will rip higher if inflation comes down and that will allow for a massive backlog of private companies to IPO with either small step downs, flat rounds, or even potentially up rounds. In that case, all those VC funds will do quite well.
The more likely scenario is that, because of macroeconomic uncertainty, ECM remains more restrictive longer than these VC funds are willing or able to keep doing flat, insider led rounds which will lead to either large down round IPOs or inability to fund some of these companies and a shut down of operations. Obviously this would be terrible to performance.
When considering the opportunity, I think outside of positions at the absolute top-tier VCs (Venrock, Bain, TRV, Atlas...maybe Orbi and BX), you need to understand how they are going to address a situation where ECM remains closed (and ideally they've been marking down the private portfolio already).
EDIT: In my experience, what other posters said about prestige is true. They are extremely prestige focused when hiring (this is part of their marketing to their own investors "We have XXX MD/PhDs on our team who have industry experience and come from top-tier schools") and a lot of company assets come out of top-tier universities, so they rely on these networks to source investments.
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