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To: ChrisJP who wrote (97557)	12/9/2001 12:28:10 AM
From: Jim Bishop	Read Replies (2) \| Respond to of 150070

Biotech Reaps Venture Cash Despite Tech Meltdown By Jim Christie SAN FRANCISCO (Reuters) - Venture capital firms are jumping on the biotechnology bandwagon, pumping cash into start-up labs and related information technology, even as they slash financing for ventures in other technology sectors. Venture firms, many stung when the Internet bubble burst, are now looking to biotech because -- despite its history of false starts -- they believe its potential products will sell in good times and bad. ``There will always be people to take advantage of these things no matter what the economy is doing,'' said Jeanne Metzger, a business development officer with the National Venture Capital Association. ``You always need better drugs.'' And better drugs will increasingly be made with the help of better information technology, opening up promising opportunities at the confluence of biotech and computing. Hitachi Ltd last week renewed a deal with four-year-old DoubleTwist to market its databases for researching genetic data online, an inexpensive alternative to buying IT systems to identify new drug targets. In a similar play, Motorola Inc. has invested in TissueInformatics Inc., which is developing a wireless-enabled database of human and plant tissue images converted into data for drug research. Biotech's popularity has kept money flowing when many entrepreneurs in other tech sectors have found the well dry. Biotech start-ups raised about $4.3 billion through the first three quarters of this year, compared with about $5.2 billion in the first three quarters of 2000, according to the National Venture Capital Association. While this marks a 17 percent drop year-over-year, biotech financing is still in much better shape than overall funding of privately held companies -- down 63 percent between the first three quarters of 2000 and the first three quarters of 2001. Biotech currently ranks third among tech sectors -- behind software and network infrastructure, and ahead of wireless, optical, broadband and semiconductors -- in venture funds raised over the past 60 days, according to the tracking service VentureReporter.net, which estimates that over that time biotech start-ups reaped $613 million. MORE THOUGHTFUL INVESTORS Biotech rode a wave of hype in the late 1980s only to come crashing down, costing investors billions of dollars. Many turned to other sectors, including the Internet and telecommunications, whose hot IPOs produced massive returns by the late 1990s for early investors. ``Many venture firms abandoned life sciences because they could not get the fast trip to liquidity that info-tech deals provided,'' said Jack Gill of Vanguard Venture Partners and a faculty member and lecturer at the Harvard Medical School (news - web sites). By contrast, venture firms now are more patient biotech investors, said Brian Dovey of venture firm Domain Associates. ``Players are coming in, but not crazy like they did before. They are more thoughtful,'' Dovey said. More selective venture backing should help drug discovery as money goes to better focused and managed start-ups. Research also should be boosted with data from the mapping of the human genome, the genetic blueprint for a human being, according to John Freund, managing director of Skyline Ventures. Meanwhile, a number of factors could also attract more venture backing for biotech, according to Philippe Chambon, a physician by training and general partner with the Sprout Group venture firm. He points to an aging population, increasing use of drug therapies and a less volatile biotech sector. SOME WARY OF BIOTECH BUST But Chad Waite, a venture capitalist with OVP Venture Partners, is, like some in his business, skeptical of renewed interest in biotech. He sees impatient venture cash flowing into biotech to make up for dot-com and telecom losses. ``There definitely is a sector rotation,'' Waite said. ``Four years ago, calls were coming in trying to get me to invest in the next 'Petfood.com.' Now they are saying they have the next great bioinformatics product or genome project product.'' Waite expects many venture firms to cut and run from biotech as they did before if times turn tough with investors losing interest, drug trials failing and IPO opportunities few and far between. ``Those who have invested and made money in life sciences for a number of years keep doing it,'' Waite said. ``Then there are fund managers who are like hedge-fund investors. They were not putting money into life-sciences (until recently) because they were putting money into dot-coms.'' dailynews.yahoo.com