Boston Blog

Outsourcing biotech in a bad economy

I covered the biotech industry back in 2003-2005, when there was much exuberance and optimism at meetings I attended—lots of talk about growth, IPOs and big rounds of venture capital funding.

Well, it’s now 2009 and a completely different climate. Funding is scarce, offices sit empty and even biotechs with big-name founders, like Codon Devices, have quietly closed up shop. I got a strong sense of this change in mood at an afternoon get-together of biotech scientists and execs in Cambridge—the Xconomy Forum: Tomorrow’s Biotech-Innovators and Innovation.

It was telling that the first speakers were from a four-person Cambridge-based biotech company, Zafgen that is not only embarking on experiments to develop new obesity drugs, but also experiments on how to develop drugs in a low cost way. Zafgen is what CEO Thomas Hughes called a “virtual company”. It outsources all of its work to contract R&D and consulting firms, rather than hiring the chemists, toxicologists and project managers that many other drug companies would have in house. It makes for a more “efficient” company, said Hughes. It’s quite a change for Hughes, who, before joining Zafgen, was a vice president at Novartis.

The company is bringing an anti-angiogenesis approach to combating obesity. It’s developing a drug that would shrink blood vessels in fat tissue, shrinking the fat along with it and aiding in weight loss in obese people. The drug would work similarly to the way anti-angiogenesis drugs, such as Avastin, work to starve tumors of their blood supply. In fact, Zafgen’s first drug candidate is a molecule that’s already been tested for oncology uses. And it should be no surprise that the scientific founder of the company, Maria Rupnick, a cardiologist and instructor at Harvard Medical School/Brigham and Women’s, worked with Judah Folkman for several years.

Rupnick gave a short talk describing her mice studies in which animals fed a high-fat diet along with an angiogenesis inhibitor gained less weight or even lost weight compared to control mice.

A company that is so focused on developing a specific type of drug for a specific target, mechanism and disease is a prime candidate to be run as a virtual company, said Hughes. Not all companies can or should try this.

The company intends to have its first drug candidate in clinical trials by the end of this year.

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