Before volunteers can participate in clinical trials, the drugs have to be discovered. That, in itself, is a long, expensive risk. NeoRx Corp., a small, Seattle-based biotech company, survived two financial blows in 1998 when Janssen Pharmaceutical and Schwarz Pharma, major pharmaceutical companies, discontinued their support of the company's leading drug candidates after disappointing results following initial testing in human beings. For biotechs, strategic partnerships with the bigger brothers of the drug world are crucial for funding drug development, clinical testing and distribution. The company reorganized, laid off staff last year and shifted focus to a different product, skeletal targeted radiotherapy for people with the cancer multiple myeloma.
Money keeps the lifeblood flowing for drug development and clinical testing.
Most biotechs are funded by venture capital, or private sources like foundations, or compete for strategic partnerships with larger pharmaceutical companies, said Robert Caspari, NeoRx vice president of regulatory and medical affairs. Companies can also go public, like NeoRx, and return to the equity market when cash is needed. In pharmaceuticals, it's not like developing software. Sometimes with new therapeutic areas, because it is science and it is biology, you don't know all the answers. Sometimes your experiments just lead you to understand you need to do more experiments.