Symphony Capital’s Collaborations, Take Two
Symphony Capital pioneered an alternative project financing model to accelerate drug development that met with mixed success. With its 2.0 retool, Symphony hopes to transition the model to larger cap companies better able to weather down markets.
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With the dissolution of Symphony Allegro and the return of the joint venture's three clinical programs to Alexza, Symphony Capital should have its exit from the $50 million investment it made in the biotech and its Staccato aerosol inhalation technology in 2006
As Wall Street fails to significantly reward companies with strong clinical news, the fall-out also affects the project financiers, like Symphony Capital -- an increasingly important alternative to traditional equity or alliance financing. On one hand, the hard times make Symphony's expensive-looking capital increasingly attractive to biotechs, including companies that once would have had plenty of other financing alternatives. On the other, Symphony's model is shifting more toward equity investing. It's still financing projects, but it's padding its upside with a lot more cheap stock.
Project financing, claim its proponents-in particular Symphony Capital-offers an alternative to highly dilutive equity offerings, preserving the upside from the development of a successful product for the biotech. That's true, though this expensive capital isn't for everyone. Yet as Big Pharma's productivity challenge deepens, project financing is helping to swing the balance of power further towards small companies.