The situation is no better on the acquisitions side as anecdotally I have been hearing from many investors and acquirers that the brakes have been applied to corporate purchases that are not strategically imperative. And if you look at the monthly numbers, there is a marked deceleration throughout the third quarter with a 2012 high of 44 transactions in July, followed by a decline to 31 transactions in August, to an annual low of 21 deals in September. On the positive side, the transactions are largely of high quality with more than half of the deals bringing in 4x or more for investors. But we must see both quality and quantity if we are to characterize the acquisitions market as healthy.

Once the elections are behind us, there is a confluence of forces that needs to come together to get us back on track. Effective government, stable markets, economic recovery both here and abroad all must be present to turn things around. Until then, we should expect a less than stellar exit market in the coming quarter.

Last week, the President's Council on Advisors on Science and Technology (PCAST) released its "Report to the President on Propelling Innovation in Drug Discovery, Development, and Evaluation" this week. NVCA Board Member and MedIC Chairman Jonathan Leff of Warburg Pincus, participated in the release of the report.

The report acknowledges the U.S. leadership and tremendous progress in biomedical research and discovery of breakthrough treatments for patients but also recognizes that the current system has not kept pace with the explosion in scientific knowledge.

The report concludes that the biopharma ecosystem is under stress primarily due to the cost, time and risk of drug development which have reached unsustainable levels. The report reinforces the importance of many of the steps we have been advocating throughout the FDA reform debate, and also calls for a national innovation strategy and the creation of a public-private "Partnership to Accelerate Therapeutics," involving all key stakeholders. NVCA/MedIC believes that the development of a national innovation strategy and this type of partnership could help provide the comprehensive framework needed to tackle the critical issues facing the future of the biomedical enterprise.

PCAST is an advisory group of the nation's leading scientists and engineers, appointed by the President to augment the science and technology advice available to him from inside the White House and from cabinet departments and other Federal agencies. PCAST is consulted about and often makes policy recommendations concerning the full range of issues where understandings from the domains of sciences, technology, and innovation bear potentially on the policy choices before the President. Therefore, since PCAST is appointed by the President, we are hopeful that if the President is re-elected to a second term, the issue of biomedical innovation will become a national priority in the second term.

The NVCA has long measured job creation generated by venture-backed companies.  Established in 2001, and updated every two years, our Venture Impact report by IHS Global Insight examines the economic contribution of U.S. companies that were originally founded, financed and nurtured with venture capital.  Our alumni list is long and broad, comprising Fortune 500 companies such as Apple, Starbucks, Intel, Cisco, Genentech and FedEx.  Understandably, the collective jobs number accounted for by these organizations is impressive – more than 12 million in 2010, accounting for 11 percent of private U.S. employment.  But what did these companies’ numbers look like “before they were stars?”  And what does the job creation pipeline resemble today?

This summer the NVCA began to explore those questions.  And the logical place to start was with our member firms, asking them to provide us with the number of jobs in their current portfolio of companies.  We didn’t want to measure alumni – Venture Impact already does this quite well.  We wanted to understand – and share regularly – how our venture firms are contributing to the job creation process on a standalone basis.

Our initial list of firms and job numbers can be found here at the NVCA Jobs Count page. The number of jobs varies by firm – with larger firms and later stage investors intuitively having more jobs due to the maturity and breadth of their portfolios.  Yet, we can not discount the smaller firms and seed stage investors.  Although they may have fewer jobs in their portfolios today, these firms and their companies remain vitally important to our ecosystem, as it has been proven that 92 percent of job growth occurs after an IPO.  And we can’t forget that every single one of our alumni companies began with just a handful of employees.

With just about 10 percent of our membership now listed on the Jobs Count board, we are looking forward to adding additional firms through the Fall as well as updating those who are now listed.  We encourage you to visit often and look out for the Jobs Count badge on our member sites.  And if you want to work for one of these amazing startup companies, be sure to visit StartUpHire.com and apply to one of the thousands of open positions today!

With the Republican and Democratic conventions front and center, NVCA and MedIC were pleased to see language around preserving American medical innovation included in the GOP Platform.  On page 34 of their document, we applaud the following section:

Reforming the FDA

America’s leadership in life sciences R&D and medical innovation is being threatened. As a country, we must work together now or lose our leadership position in medical innovation, U.S. job creation, and access to life-saving treatments for U.S. patients. The United States has led the global medical device and pharmaceutical industries for decades. This leadership has made the U.S. the medical innovation capital of the world, bringing millions of high-paying jobs to our country and life-saving devices and drugs to our nation’s patients. But that leadership position is at risk; patients, innovators, and job creators point to the lack of predictability, consistency, transparency and efficiency at the Food and Drug Administration that is driving innovation overseas, benefiting foreign, not U.S., patients.

We pledge to reform the FDA so we can ensure that the U.S. remains the world leader in medical innovation, that device and drug jobs stay in the U.S., that U.S. patients benefit first from new devices and drugs, and that the FDA no longer wastes U.S. taxpayer and innovators’ resources because of bureaucratic red tape and legal uncertainty.

Clearly this language dovetails with the efforts of NVCA and MedIC over the last several years and we are encouraged by the support.  We are hopeful the Democrats will also make medical innovation a priority issue in their platform, expected shortly, as well.

After more than eighteen months investigating the Department of Energy Loan Guarantee program, the House Energy and Commerce Committee yesterday passed H.R. 6213, the “No More Solyndras Act” by a vote of 29-19. The bill prevents loan guarantees for any applications submitted after the end of 2011, and would place new restrictions on application reviews and existing loans.

The NVCA, along with TechNet, ACORE, SEIA and E2, put out a statement against the bill saying that the program should be reformed, not shut down.  Our statement read in part, "While the DOE Loan Guarantee Program can be improved, elements of the ‘No More Solyndras Act’ go far beyond reasonable reforms and threaten to shut down a successful policy that has helped drive billions in private capital investment, supported tens of thousands of badly-needed jobs and spurred innovation across the sector.” You can read the full statement here.

The bill will be voted on by the full House in September.  However, we believe passage in the House would only send a political message rather than ensure passage of a substantive piece of legislation as it stands no chance of moving in the Senate.  Chairman Bingaman and Ranking Member Murkowski have both indicated that they see a role for the federal government in programs like the DOE loan guarantee and, despite the failings of Solyndra, the entire program is not a failure.

When it was first enacted in the energy bill of 2005, the DOE loan guarantee program had the strong support of the Bush Administration and bipartisan support. The program was accelerated and began making loans following President Obama’s 2009 economic stimulus bill.  The NVCA will continue to support the DOE loan program with a commitment to appropriate reforms to protect taxpayers.