FDA sends letters to genomic testing companies

Of interest to those in the genomic testing space, via BioCentury:

FDA sends letters to genomic testing companies

FDA sent letters to 14 companies that market genetic testing kits notifying them that the tests do not have FDA clearance or approval. The agency requested a response within 15 days. The letters come on the second day of a public meeting to discuss FDA's forthcoming oversight of laboratory-developed tests (LDTs), which the agency has historically not regulated.

On Thursday, the House Energy and Commerce Committee's subcommittee on oversight and investigations will hold a hearing to discuss direct-to-consumer personal genetic tests. FDA has already sent letters to six other companies regarding their respective personal genetic testing kits.

Interleukin Genetics Inc. (NYSE-A:ILI) and Sequenom Inc. (NASDAQ:SGNM) each received a letter. Interleukin markets its Inherent Health personal genetic test, while Sequenom markets the SEQureDx test to detect circulating cell-free nucleic acids in blood samples from pregnant women for fetal gene and chromosome abnormalities. Interleukin was off $0.02 to $0.40 on Tuesday. Sequenom was off $0.12 to $5.69.

Good times ahead?

What a beautiful weekend. Great weather, multiple gatherings at friends, and squeezed in a quick 5 mile run down the Huron River.

I happened to download the most recent PwC/NVCA MoneyTree Report in raw data format. A lot of interesting observations, but some are as follows:

• upward quarterly trend in total $ and # deals invested with slight dip in Q1 2010, resulting in a more favorable H1 2010 vs H1 2009 comparison.
• 2009 H1 vs 2010 H1, $ and deals:

Biotech: 35% increase, 24% increase

Financial services: 213%, 62%

Med Device/Equipment: 13%, 9%

All: 49%, 23%

• cleantech investments: higher # deals and $ invested, 64% and 203% respectively, 2009 H1 vs 2010 H1; already invested more $ as of H1 than total 2009 $.
• initial investments in 2010 H1 in Seed and Early Stage companies outweighed investments in Expansion and Later Stage companies by over 50%; there were also increases in # of deals and $ invested in Seed and Early Stage companies attracting initial investments.
• last quarter, 2010 Q2, biotech sector received the largest level of funding of all sectors- $1.3B.
• average initial investments in seed, early stage, expansion, and later stage companies in 2010 H1 were $4.5M, $3M, $7M, and $5M.
• initial investments in biotech increased by 60% and 79% in $ invested and # deals, respectively, in a 2009 H1 vs 2010 H1 comparison. 17% of the initial $ invested in 2010H1 went to biotech (at an average of $5M per deal), surpassed only by software where 18% of the initial $ invested went. Med Devices/Equipment and Healthcare services garnered 9% and 2%, respectively, of initial investments in 2010 H1.
• the largest number of deals to receive initial investments in the first half of this year were software (25%), followed by biotech (14%). Med Devices/Equipment and Healthcare Services comprised 6% and 1%, respectively, of the total number of deals to receive initial investments.
• Michigan data indicates declining $ and deals invested from 2009 Q3 ($36M; 9 deals) through 2010 Q1 ($14M; 4 deals) with an improvement in 2010 Q2 ($45M; 10 deals).

Some points to highlight:

• Quarterly trends are encouraging for early stage entrepreneurs
• Overall investment trends encouraging
• Biotech and Cleantech sectors are but 2 sectors with encouraging initial investment data; the former having particularly encouraging total investment $ data coming off of last quarter as the sector receiving the largest pool of investor $, and the latter finally getting the pickup it needs to really be impactful despite the dearth of exits in this space
• Greater investment $ and deals going to the seed/early-stage space
• Investments in Michigan remain tepid with encouraging growth in the first two quarters of this year; my assessment from speaking with investors and hearing exciting, yet-to-be-publicized news from a number of companies across the state is that we will end 2010 with many more $ and deals invested vs. 2009

Observations from an entrepreneurial pitch

Hope everyone had an exciting July 4th. Over the weekend, I had an opportunity to attend an entrepreneurial pitch event in Chicago. Now, there is a ton of credible material online on the proper mechanics and delivery of an elevator pitch, so I am not going to get into that here. What I will comment on here are common elements that I found missing in the pitches:

1. Rambling: Cut to the chase. Pin down a structure and stick to it. And, of course, practice, practice, and practice!

2. "I don't know": Nothing turns off investors quicker than an "I don't know" answer to an obvious question that an entrepreneur should know. For example, a technical term is utilized in a pitch and an investor requests a general clarification on that term. The entrepreneur's hands go up in the air accompanied with a "I am just the business guy; I don't know what that term means." (Actual quote from the event.)

3. Your "ask": Clearly enunciate your "ask". Are you seeking financing? If so, how much, what's the structure, and what do you hope to accomplish with it. Maybe you have money, but need management or advisory team members. Whatever the case, be specific and don't neglect the "ask" portion in the pitch.

4. Milestones: It's great to talk about the company, management, cool idea, and the focus market in your presentation. But what will make a presentation even more compelling is to highlight briefly the milestones you have achieved since the last round of funding or to date. Doing so conveys that there is a healthy development inertia, indicates a development strategy, and provides context to the "ask".

5. Accept feedback: Please do not argue or engage in a back and forth session with judges as they critique your pitch. To me, this conveys a lack of maturity on part of the entrepreneur; resistance to learning and change; and lack of coachability-- these are all attributes that are major dings to your company, even if the product/service concept is robust. No investor wants to put money into a company with a CEO or management team that will not be open to new ideas, advice, and business models.

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