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Exclusive Life Science Feature And the present seems to be a good time for optimism, with biotech IPOs in a remarkable boom, as well as new funding pipelines opening up to fill the gap left by venture capital's retreat from early-stage deals. So goes at least part of the story we hear from Art Pappas, founder of Pappas Ventures and a seasoned veteran of life science investment. Pappas sounds primarily upbeat about drug delivery, medical devices, and related life science ventures. The firm now manages more than $350 million in capital and claims credit for "launch and/or development" of more than 50 companies, such as Arena, Chimerix, Peninsula, Plexxikon, and Tesaro. Pappas and his partners remain bullish but highly selective in funding early-stage companies and products. THE STATE OF VENTURE CAPITAL "When companies have tried to rush drugs with marginal improvements through the regulatory process, the [FDA]has been very difficult to deal with." Art Pappas, founder of Pappas Ventures the emerging options for an industry made largely of start-ups and venture capitalists. "We've seen an appropriate culling of the industry in the number and size of funds, as well as the number of science projects versus true sustainable enterprises, after a period where excellent investment returns were dampened by poor product performance and regulatory hurdles," Pappas says. "Now we're seeing an unbelievable pipeline of exceptional medical discoveries being developed in a regulatory environment that is much more transparent and predictable for investors, where we can count on survival of the fittest." Pappas Ventures is not the largest fund in life sciences, but it is one that exemplifies VC survival and success through the perilous times the life sciences sector has been facing. Pappas founded his firm in 1994 to invest solely in biotechnology, biopharmaceuticals, 26 LifeScienceLeader.com September 2013 This is where I'm supposed to tell you how awful the VC climate for biotech has become. But of course it isn't that bad, as the VCs themselves well know. I had read through most of the PwC report on life science deals in Q1 2013 when I spotted it — yes, overall life science VC activity dropped 28 percent in dollars and 23 percent in number of deals from Q1 2012 to Q1 this year. But the human biotechnology sector actually rose 1 percent in the same period. Medical devices also fell as a whole but had some growth in the medical/health products subsector. And then came the great Q2 boom of 2013, with more than a dozen life sciences companies going public successfully and VCs putting about $1.3 billion more into the sector than they had in the previous quarter. Was this all paper headlines drifting in the prairie wind? Or does the surge in funding relate more to fundamentals — a general healing of the macro economy, the return of "specialist" industry-wise investors, and the de novo participation of a fresh crop of "generalist" investors and funding sources? Pappas simply welcomes all comers. "The industry itself is in a bit of flux, maybe in a bit of a crisis," says Pappas. "Venture capital, in general, has stimulated the creation and growth of the overall biopharmaceutical and medical device industries, including that of the diagnostics sector. But the performance, particularly over the last 15 years, has been less than impressive for the life science asset class." Pappas has a credible perspective on shifting times and trends — arguably, a sanguine view you can only obtain through sufficient years and experience. The broader sense of accomplishment tem-