Wednesday, April 1, 2015

Biotech Firm Shows San Diego How New Products Draw Investment

San Diego’s has added another successful business to its budding biotech hub. Start-up firm aTyr Pharma, Inc. drew over $76 million investment capital from Sofinnova Ventures and another undisclosed entity to develop its drug called Resolaris that helps treat muscular dystrophy (Fikes, 2015). Biotech firms like aTyr help encourage greater investment and employment in the San Diego economy.

Every investment opportunity comes with risk and rewards. Venture capitalists diligently assess whether the risks and rewards are worth investing their hard earned capital.  Risk tolerant investors are more likely to get involved in highly innovative startups (Tian & Wang, 2014). In this case, a single patentable and profitable drug can make or break the firm’s long-term future.  

The ability to have exclusive rights to manufacture an important drug can be worth hundreds of millions of dollars. Approval of Resolaris for use and testing in the E.U., U.S. and other markets will add significantly to its value. The risks are lower and potential profit higher for companies that already have approvals.

Cities like San Diego have growing biotech hubs that produce more pharmaceutical start-ups than cities with less developed networks. The knowledge needed to invent and produce new drugs come from clusters of like-minded individuals who work within the local pharmaceutical industry. As they act and interact they innovate new drugs, models, and products.

When new start-ups develop they will draw more investors to the area seeking better opportunities to expand their investment portfolios. Successful start ups rely on existing local knowledge learned from communities that encourage an entrepreneurial spirit. As start ups make their way out of the incubation periods and product tangible products investors flock in maximize profits both helping local businesses as well as expanding employment opportunities.

Fickes, B. (April 1st, 2015). San Diego biotech raises $76 million. UT San Diego. Retrieved

Tian, X. & Wang, T. (2014). Tolerance for failure and corporate innovation. Review of Financial Studies, 27 (1).

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