CONTACT US

A Shift in Perception Could Bring Capital Flooding Back to Science Companies

Market psychology can turn quickly with major headlines, and the Ebola epidemic’s effect on the stock market is no exception. With the Ebola outbreak unfortunately progressing, the stock market is seeing negative fluctuations in areas such as travel; but some life sciences companies are seeing a benefit that is helping to raise capital.

For example, Tekmira Pharmaceuticals, which made headlines with their Ebola drug, saw a share increase of 200% this year. Lakeland Industries, a company that makes Hazmat suits, has seen an increase of almost 300%. Inovio Pharmaceuticals’ shares saw an increase after the company announced collaboration with GeneOne Life Science in the development of a DNA-based Ebola vaccine that, based on pre-clinical studies, might not only work as a preventative but as a treatment for multiple strains of the virus.

But what about science and technology companies that are not developing Ebola drugs? The good news is that venture capitalists are starting to have renewed interest in science companies, including a wide range of technologies. For example, Google announced the intent to buy Lift Labs, a biotechnology start-up that makes a high-tech spoon for people with hand tremors.  John Sorenson, a chief executive at Vestaron, makers of an eco-friendly pesticide, was quoted as saying, “Thankfully, venture funders are starting to invest again in real, hard-core science and innovation.”  In fact, investment in biotechnology start-ups saw a 26% increase in the first half of 2014 and is on a trajectory to exceed the peak experienced in 2008.

While investment in non-concrete products like Twitter, Facebook and Uber may be appealing in a tech-feverish stock market, there is something to be said for true innovation in the tangible goods markets. A quote from Adam Draper, the chief executive and founder of Boost VC, sums it up. “I’m just so interested in anything that gets me closer to an Iron Man suit.... V.C. funding is supposed to be about funding what comes next.”
 

 

Marc Fogarty, Audit Partner and a member of EisnerAmper's Public Companies, Cleantech and International Services Groups. Marc is experienced in public accounting, serving public and private organizations and has presented on IFRS to professional groups.

Contact Marc

* Required