From the Biotech Business Development Conference

The packed house of attendees at today's Biotech Business Development Conference in Cambridge would seem to be a sign of the industry's health. But everyone here seems to have a long list of worries. (The event is organized by Christoph Westphal, co-founder of Sirtris Pharmaceuticals and now also an exec with GlaxoSmithKline, which acquired Sirtris last spring.)

Biotech CEOs working on new drugs are worried about FOBS: follow-on biologics. The US could soon make it legal for companies to produce generic versions of biological drugs (the biotech industry prefers to call them "biosimilars.") That could cut the profit potential of the very expensive new molecules now in development. John Maraganore, CEO of Alnylam Pharmaceuticals, said the industry needs to adopt "a science-based approach" to persuading legislators and the public that follow-on biologics ought to be tightly regulated, rigorously tested, and carefully evaluated by the FDA. In the past, Maraganore said, "we were obstructionists" about the very idea of follow-on biologics.

There's concern about new regulations that govern how biotech and pharma companies can discuss (or "detail") their products with doctors. "Detail times of 60 to 120 seconds is not much different from the UPS guy making a delivery," said David Pyott, CEO of Allergan. "The only difference is the drug rep is better paid, and sadly, better educated." Pyott predicted that drug companies will have to devote more resources to online education for physicians.

Privately-held biotech companies worry about losing negotiating leverage with bigger partners if it's perceived that they're running short on cash. Duncan Higgons of Archemix suggested that many big pharma companies have created their own lists of distressed little biotech companies, and are planning to do some "bottom-feeding" in this environment, buying them (or certain assets) at a discount. Having enough cash on hand to walk away from a deal is always a good thing, said Steve Bernitz of Concert Pharmaceuticals.

Publicly-traded companies feel like the markets aren't rewarding progress. David Meeker of Genzyme noted that the company has had three new drugs approved in the past three months, and yet the company's stock is down 30 percent.

Venture capitalists are finding it isn't so easy to raise that next fund. Jonathan Fleming of Oxford BioScience Partners told me his firm had put fund-raising "on pause" earlier this year, and described the fund-raising environment as "absolutely horrible." (But he said the firm would be out again talking to prospective limited partners "sooner rather than later.")

Investors and start-ups are worried about the focus on later-stage assets. How will new innovation be supported if everyone is focused only on getting products that are already in Phase III clinical trials across the goal line?

"There's a real failure of the capital markets to fund projects to the point where there's an ROI," said Craig Wheeler of Momenta. "If it continues, we could see real damage to the model that has supported innovation of the last twenty years."

Even Wyc Grousbeck, the Boston Celtics owner who'd previously been a healthcare investor at Highland Capital Partners, had a few problems to gripe about (despite sporting a glittery Celts' championship ring on his right hand), most notably injuries to Rajon Rondo and Kevin Garnett, two key team-members.