Project financing, claim its proponents-in particular Symphony Capital-offers an alternative to highly dilutive equity offerings, preserving the upside from the development of a successful product for the biotech. That's true, though this expensive capital isn't for everyone. Yet as Big Pharma's productivity challenge deepens, project financing is helping to swing the balance of power further towards small companies.

The Vicuron acquisition auction, won by Pfizer, starkly revealed the fact that the biggest Big Pharmas have now got a striking advantage in their ability to access new products. Not only do they have more cash than anyone else, they can spend it without hurting the "adjusted" profits they highlight to Wall Street. As importantly, investors don't punish them on the basis of the expected returns from these investments. Indeed, the market expects them to spend the money-for now.

Productivity in biotech is a better problem to have than its opposite-but paying the higher-than-expected development costs makes it still a problem. Thanks to a variety of new project financing sources, and a particularly clever approach to amending its alliance with GlaxoSmithKline, Exelixis is fact trying to turn research productivity into a source of non-dilutive capital.