Early Biotechnology IPOs Led to Greater Growth

As one of the first physician analysts on Wall Street, Dr. Lindsay Rosenwald came to the biotechnology marketplace with a strong understanding of what would benefit medicine in general and secure profits at the same time. Entering the world of biotechnology investment in the mid-1980s, Dr. Lindsay Rosenwald built upon a precedent largely set by Genentech, SmithKline, and other innovative biotech firms 10 years earlier.

With SmithKline’s development of Tagamet (the first-ever “blockbuster drug” with $1 billion in annual revenue) and Genentech’s advances in rDNA technology, the mid-1970s proved a fertile ground for the nascent biotech sector. When Genentech launched a highly successful initial public offering in 1980, opening itself to investment on Wall Street became the next logical step for innovators in the life sciences, followed by other, early IPOs Cetus, Applied Biosystems, and Amgen. At the same time, much larger pharmaceutical companies began acquiring promising biotech firms that had yet to go public, creating multiple pathways for these new drug developers to grow and expand.

Biotechs Experience Success after Initial Public Offering

The co-founder of the New York City asset management firm Opus Point Partners, Lindsay Rosenwald has built a career around biotechnology investment. Since the 1980s, Lindsay Rosenwald has identified investment opportunities in the medical sector, having served as one of Wall Street's first physician analysts.

As of July 2013, 16 biotechnology companies have gone public this year, with more than half a dozen companies completing initial public offerings in June alone. Share prices for these firms are now at an average of 48 percent higher than their offering prices. This jump is due in part to Onyx Pharmaceuticals' recent refusal of a $120 per share buyout offer from international giant Amgen. Onyx's demand for a higher price launched a wave of stock increases for biotechs across the country. In mid-July, the New York Times reported that "four of the top 10 performing companies on the Nasdaq year-to-date were biotechs."

In addition, larger companies have acquired venture-capital-backed biotechs. In the second quarter alone, industry leaders bought out five such firms. Moreover, pharmaceutical companies often target small biotechs as licensing partners, saving themselves the upfront investment in research and development.

Pharmaceutical and Biotech Sectors Experience Surge in China

Over the last two decades, Lindsay Rosenwald has funded an array of small biotechnology firms, and he has sold several of these companies to large pharmaceutical corporations. Today, Lindsay Rosenwald draws on this experience in his work as co-manager of the asset management firm Opus Point Partners in New York City.

In recent years, health care spending has increased dramatically in China. In 2006, only 43 percent of the Chinese population had health insurance, and the average health care spending per person was $119. Five years later, 95 percent of the population had health insurance, and spending had jumped to $261 per person.

In response to the country’s increasing commitment to health care, pharmaceutical companies have started making inroads in the Chinese market. Major firms such as Sanofi, Novo Nordisk A/S, and Eli Lilly and Company have helped grow the pharmaceutical market size to more than $71 billion. Additionally, these corporations are collaborating with and investing in an array of local partners.

China also boasts a burgeoning biotechnology industry; thanks to more than $160 billion in investments, the sector has developed 12 new drugs. Presently, the country is focused primarily on producing therapies to treat cancer, and it places a significant emphasis on biologics rather than small molecule drugs. By 2020, officials hope to bring 100 new therapies to market.

Two Basic Differences between Biotech and Pharmaceutical Firms

A New York City-based investment professional, Dr. Lindsay Rosenwald co-heads an asset management hedge fund dedicated primarily to the biotechnology sector. Over the course of his career, Dr. Lindsay Rosenwald has played a role in developing drugs to treat prostate cancer, influenza, and rheumatoid arthritis.

Although the work of biotechnology and pharmaceutical companies often overlaps, several major differences actually exist between the sectors. This article will discuss two such distinctions.

Firstly, biotechnology firms typically work with complex proteins, genetic material, and microorganisms. Rather than using chemical-based synthetic processes to develop small-molecule drugs, as pharmaceutical companies do, biotechnology firms focus their research on the discovery of novel compounds that can be applied to various therapies.

Secondly, biotechnology companies often operate at a loss during their extensive research and development phases; however, by taking this risk in R&D, they are often responsible for creating the most innovative drugs on the market. On the other hand, pharmaceutical companies generally invest more in marketing and sales, and can use the funds from current drugs on the market to subsidize new research or to license new drugs from organizations like biotechnology firms. Upon creating a successful drug or therapy, many biotechnology firms collaborate with larger pharmaceutical companies that have a marketing and sales infrastructure in place, licensing the drug to or even merging with the larger firm.

From Wall Street to Biotech

A biotechnology and life-sciences investor with numerous achievements in his field, Lindsay Rosenwald serves as one of two founding partners of Opus Point Partners, an asset management firm in the healthcare sector. Raised in Pennsylvania, Dr. Rosenwald graduated from Abington Senior High School before enrolling at Penn State University, where he pursued studies in finance and economics. An outstanding student and member of the Beta Gamma Sigma honor society, Lindsay Rosenwald graduated from Penn State with a Bachelor of Science in 1976 and subsequently became an independent management consultant for the burgeoning healthcare industry. From there, he gained admission to the Temple University School of Medicine, earned his Doctor of Medicine in 1983, and completed his clinical training in internal medicine at Abington Memorial Hospital. After a period in private practice, Lindsay Rosenwald returned to the business world and began a prolific career in the investment and management of promising drug development companies.

Having worked on Wall Street in the mid-1980s, Lindsay Rosenwald became a hugely successful venture capitalist in the Biotech space. To date, Dr. Rosenwald and his companies have licensed and further developed over one hundred drug candidates. More information on Lindsay Rosenwald and his work can be found at www.linkedin.com/in/lindsayrosenwald.