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Biotech Funding, Spending Continue To Rise

Biotech companies boosted spending on research and development for a second year in a row, according to a new report.

Aired 6/25/12 on KPBS News.

Biotech companies boosted spending on research and development for a second year in a row, according to a new report. That’s good news for San Diego’s economy, where biotech plays an important role.

Transcript

Christian Deck, researcher, General Atomics May 2012
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Above: Christian Deck, researcher, General Atomics May 2012

Steve Hoey, the director of business creation and development at the technology trade group CONNECT, said funding for San Diego biotechs is also on the rise.

Last year in San Diego, a few types of funding for biotech companies increased, he said.

One, venture capital funding, provides money for new companies that are not yet traded on the stock market. The other, called follow-on public equity, is a type of second-round stock options for companies that have already made their stock market debut.

Hoey, who helps research and write CONNECT's quarterly Innovation Report, said five San Diego companies raised about $600 million in follow-on equity in the last part of 2011.

"That money can go into research and design and is a good source of capital for a company that's in the public market already," he said.

Biotechs and pharmaceutical companies received $400 million in venture capital funding in 2011, he said.

Hoey said whatever the funding type, more money is good news for San Diego.

“Economically, the immediate impact is on jobs," he said. "So this funding that was received enables the company to continue its business, to hire additional employees, to retain staff and employees as well. If there’s a lack of funding, that’s one of the reasons why companies oftentimes fail, that they don’t continue to receive sufficient funding to continue to develop and grow the company moving forward, and so the company downsizes.”

But Hoey said not everything is rosy for biotechs. Government grants, which new science companies often use to get their start, are in serious decline thanks to budget cuts sent from Washington D.C.

“Unfortunately, just in the fourth quarter and the early part of 2012, there was a marked decrease in NIH funding overall nationwide and to San Diego," he said.

Hoey, who helps research and write CONNECT's quarterly Innovation Report, said five San Diego companies raised about $600 million in follow-on equity in the last part of 2011.

"That money can go into research and design and is a good source of capital for a company that's in the public market already," he said.

Hoey said about 140 new San Diego biotechs opened their doors in the last two years, and those companies created about 300 new jobs.

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