Biotech risk includes technical, commercial and regulatory.
1. This Forbes article (Nov 11) by Bruce Booth (the Life Sci VC) discusses late stage versus early stage risk. He starts with discussing the how perceptions of risk are the driving factor in biotech investing, and goes on to list the risk factors others than the scientific risk. These include regulatory, financing, liquidity, execution, reimbursement and idiosyncratic safety risk. He concludes by suggesting that venture capital should focus on early stage investments, leaving larger players with deeper pockets and more resilience to invest in late stage work.
2. In an Xconomy article on use of Twitter in biotech tweets on the subject of risk are quoted which provide insights as to how the different types of risk are perceived. Technical risk is preferred to regulatory and commercial risk, since technical risk can be understood and mitigated, whilst regulatory risk is seen as ‘random’ and commercial risk is a moving target.
3. Life Sci VC (Sep 12) mentions a much discussed problem, that of lack of reproducibility in scientific research. Figures of 25% and 6% are quoted for reproducibility of studies in the healthcare field. The article discusses possible solutions, including blind studies, showing all results, repeating experiments, having appropriate positive and negative controls, using validated reagents and using the appropriate statistical tests.