We’ve posted a new article on the Bioentrepreneur home page, investigating the costs of going public for small companies. You can access both the HTML and PDF versions here. The author is Mark Kessel, who writes for Nature Biotechnology on occasion, including here (on Sarbanes-Oxley) and here (pharma’s troubled business model). He’s also hosted one of our Bioentrepreneur “Meet the Author” discussions, which you can find here.
To be hatched in an incubator is quite common and important in Brazil. The technology-based incubators are of fundamental importance in the national and international strategy. In the recent mapping of the biotech industry in Brazil, coordinated by the Brazilian Association of Biotechnology – Biotech-BR with the support from APEX Brazil, we found that more than 50% of Brazilian-formed biotech enterprises were linked to an incubator.
But what does it mean to be created in an incubator? The incubator provides a good cost-benefit equation, and the entrepreneur feels supported by the physical structure, but more importantly, there is a sense of integration that occurs between businesses located in close proximity. New ideas come up during a coffee break, and there can be businesses that complement, or even compete against, one another. Another key point is to make entrepreneurs think long term and imagine the future.
Often, a small business is an avalanche of daily problems and decisions, which can hinder long-term view. What will I do, where are the opportunities, how should I position myself? In a small business, these sorts of questions can be stifled by daily needs, and true growth really happens only by leaps. Being in an incubator requires business plans, reports, consultants, information, forcing companies to stop and think about those long-term questions.
Another important variable is the entrepreneur’s ability to handle the stress of business. Technology entrepreneurs often leave an extremely safe structure (imagine an university) to enter into something very insecure: a start-up business. At this point, being in an incubator helps to handle this insecurity, because we look at each other and see that if the other can do it, so can we. Being close to other entrepreneurs and other examples comforts us. This aspect of dealing with problems calmly and wisely is a hallmark of a good entrepreneur!
And then comes a very fundamental question: why start a business anyway? The answer seems to be simple: to earn money. That is an important answer for the investors, but it has to be more than that. It is also the satisfaction of meeting a challenge. Some entrepreneurs define it as walking close to the edge (preferably without falling in!). I sometimes say it’s like taking a step without knowing where the foot will land.
The model incubator and technology park is critical to any country’s biotech development. In Brazil, the success of more than 50% of the biotech startups depend on it. I believe that there will soon be a new era of globalization or internationalization of incubators. When we think about our companies, we must think of them as international. If incubators work well at the regional level, they also will work internationally. Even a small company can think of creating a subsidiary in another country using the network of incubators and technology parks. In Brazil, we are already doing it!
Being an entrepreneur in biotech is fantastic, and incubators help us organize our thoughts and put our feet on the ground!
It will have been very hard to miss, in recent weeks, the worldwide furore that has erupted over the so-called “killer flu” that came out of laboratories in The Netherlands and in Wisconsin. Essentially, for those living under a rock somewhere, both groups managed to convert infectious H5N1 highly pathogenic avian influenza (HPAI) viruses from being non-aerosol transmissible, to being aerosol-transmissible in ferrets. This is a big deal, because (a) H5N1 as it is presently found in the wild is difficult to transmit between ferrets or between people, (b) ferrets are the best-accepted model for transmission of influenza viruses in humans.
The next thing to happen was that the groups presented their work at an international meeting, as a prelude to more formal publication in peer-reviewed journals. This started the hype machine, which got into full swing round about early December, when the first mentions of “Scientists Make Killer Flu Viruses!” started to be seen in the popular media – including inaccurate claims such as:
“A Dutch laboratory has developed a mutant version of the deadly bird flu virus that is for the first time contagious among humans.”
Meanwhile, the two groups wanted to publish their work; specifically, in Science and Nature. However, a body named the National Science Advisory Board for Biosecurity (NSABB) in the USA got involved, and recommended to the US Dept. of Health and Human Services (HHS) that the journals withhold or redact important details of both studies relating to the methodology and certain specific results – and this is apparently what is going to happen, despite the fact that Nature at least is an international journal, and Fouchier and colleagues are not Americans.
There are authoritative comments from both sides of the fence, with bioterrorism experts and advisors decrying the fact that the work was done at all, and others like Peter Palese saying in Nature News that “controlling who is allowed access to information about mutations in the H5N1 bird flu virus is unacceptable.”
Ron Fouchier and Albert Osterhaus of Erasmus Medical Centre in Holland have their own say in a Nature News special on “Preventing pandemics: The fight over flu”: they state, very forthrightly, that
“So far, most of the human deaths from the deadly H5N1 strain of bird flu have occurred in Asia and the Middle East. Many labs worldwide — including ours — are trying to understand what makes the virus so virulent, and how to stop it. H5N1 research is thus a global issue, yet the entire research community seems to be following the advice of one country” [my emphasis].
I couldn’t agree more – and have said so several times in comments to blogs, and on my own ViroBlogy site, including comment on who should make such decisions.
As I have pointed out here previously in the context of barriers to developing country gene synthesis, a few governments have abrogated to themselves the right to dictate to everyone else just what genes should be allowed to be synthesized. I mentioned than that the authorities in these countries – members of the so-called Australia Group – were paranoid about
“…bearded extremists in caves (or crew-cut extremists in leafy suburbs) gleefully unwrapping their couriered DNA and brewing up a nice little necrotising poxvirus, or an airborne Ebola, or possibly an H5N1 variant that spreads human-to-human better than the present versions” [my present emphasis].
Possibly an unfortunate choice of example, in retrospect – but I hold to my opinion that most of the concern about these things happening is simply unjustified paranoia. Moreover, the way the concern is being expressed at an official level – redacting details from papers describing mutations that make H5N1 aerosol-transmissible in ferrets – represents a form of scientific imperialism that is as distasteful as it is unnecessary.
Consider the following:
Yet, authorities in one country – the USA – are presuming to dictate to everyone just what can be disseminated, on the grounds that the information MAY be useful to terrorists who could “weaponise” H5N1.
Consider further: the mutated viruses have NOT been shown to be:
yet it is being taken as a given that all of these are true, because it is true in ferrets. Vincent Racaniello has pointed out elsewhere in blogspace that:
“…it would be foolish to conclude that ferret influenza is the same as human influenza in all aspects. For example, not all influenza virus strains have the same virulence in humans and ferrets. A good example is the 2009 pandemic H1N1 virus which caused severe infections in some ferret studies, but was relatively mild in humans”.
So what are we left with, we in developing countries? Nothing, is what: no assurances that we know about that the redacted information will be shared in the near future; no assurances that a wider consensus will be sought in the future – and not a word from the journals about what looks like a meek submission to force majeure.
Ah, well – time will make fools of us all, and hopefully bodies like the NSABB sooner than most. I’m waiting.
Our biweekly roundup of news for those with a bioentrepreneurial bent kicks off in 2012 with stops in China, Japan and Panama. If you feel like we’ve missed something important in your corner of the world, please post a link to the article in the comments.
* SmartPlanet introduces us to one of China’s fast-rising biotechs, Beijing-based biochip company CapitalBio. The 10-year-old company employs 500 staff and recently inked a 100 million RMB (about $US 15 million) contract to provide Beijing’s city government with biochip diagnosis kits to screen all of the city’s newborn babies for a potentially deafness-causing allergy to antibiotics. Though rightly bullish about his company’s prospects, CapitalBio CEO Jing Cheng is also unusually candid about the challenges faced by Chinese biotechs, including the country’s bureaucratic healthcare system and massive brain drain problem, resulting in an urgent shortage of talent. Read it here.
* With the rise of biotech in Asia comes an increased demand for cell culture media. According to Genetic Engineering News, Irvine Scientific’s recently opened 18,500 square-foot cell culture media manufacturing facility in Tokyo will serve the growing demand for media in Japan and elsewhere in Asia, and to provide “redundancy” with its 75,000 square-foot facility in Santa Ana, California. Full article here.
* The Nagoya Protocol Implementation Fund (NPIF), started last year to support projects in developing countries that promote access to and sharing of the benefits of biodiversity, has chosen its first grant recipient— a joint venture between the government of Panama, research institutions and private sector companies that will develop a database on biodiversity and natural products. The NPIF will contribute $1 million to the $4.4 million, three-year project. Click here for more.
The annual J.P. Morgan healthcare conference was held in San Francisco January 9-12. This was the 30th running, so the meeting has been in existence since before investors needed to consider biotech.
They’re definitely considering it now, with a long list of biotechs presenting to investors, media and other attendees in the Westin St. Francis hotel. The conference is considered an unofficial kick-off for the industry’s coming year, and it also serves as a chance to take biotech’s pulse. The mood seemed high enough this year, though that was helped by warm San Francisco weather and by two venture capital groups (Canaan Partners and Flagship Ventures) announcing funds. That gives one hope.
I spent a good portion of time having one-on-one meetings in the hotels surrounding Union Square, talking with founder CEOs and serial entrepreneurs. The early years of a biotech are rife with entertaining, informative stories – tales of no money, small space and a steep learning curve ahead – and most founders enjoy looking back at their beginnings. (Reminds me of this Bioentrepreneur article by Julian Bertschinger.)
The conversations were mostly off the record, so I’ll leave the names and companies out, but I had one man, a founder of six previous companies with profitable exits, tell me that every time he tries to quit the industry and retire, boredom draws him back because he misses the excitement of building something from scratch. Another told me that when he left his university job for a startup back in the ’80s, it was so unheard of at the time that he was “ostracized” by his peers. Another told me he left venture capital for his current company because he honestly felt it could be a game-changing technology, and he wanted to be a part of it. That’s not a particularly novel thing to hear from a CEO, but the point is this: he’s thinking big, as most entrepreneurs do.
Most entrepreneurs also seem willing to gamble for the sake of something different. Most like the idea of being their own boss, and they are confident in their abilities.
These intangibles of entrepreneurs – risk taking, gamblers, fearlessness – they’re key elements. I’ve worked at established companies my entire professional life, so my guess is I’m not a gambler when considering my career. But I bet many of you are.
* For a much more in-depth look at JPMorgan, complete with bullet points and advice, see Bruce Booth’s post on his blog, LifeSciVC.
Below is a list of upcoming conferences, seminars, roundtable discussions or similar events that should be of interest to small biotechs and entrepreneurs. We’ve been publishing this list on the Bioentrepreneur home page for years, but we’re now distributing it through the blog, as well. These events are flagged by our editors as potentially interesting for the Bioentrepreneur readership, but certainly we do not get them all. Feel free to post in the comments section other events that might interest the Trade Secrets community.
18th Annual Wharton Health Care Business Conference
February 16–17, Hyatt at the Bellevue, Philadelphia
https://www.whcbc.org/conf2012/
10th Annual BioPartnering North America
February 26–28, Vancouver Convention Centre, Vancouver, Canada
https://www.techvision.com/bpn/?src=cambridge
UK BioIndustry Association Research and Development Conference
February 28, London
BioNetwork East
March 5–7, Eden Roc Renaissance, Miami
5th Annual European Life Science CEO Forum for Partnering and Investing
March 6–7, Hilton Zurich Airport Hotel
https://www.sachsforum.com/zurich_elsceo12/index.html
From the January 2012 issue of Nature Biotechnology, below is a link to our map of global biotech news: a collection of items that we hoped to pass along but could not cover more extensively in the magazine. The issue itself went live yesterday.
Any bioentrepreneur considering a start-up to develop a new drug is quickly bludgeoned by the conventional wisdom that such a venture is too expensive and too high-risk to attempt. One whack is the often-cited sound bite cost of $800 million per new approved drug that was reported by DiMasi, et al, and which is now up to $1.7 billion or more (see Munos 2010). Another is the high failure rate of drugs in human trials (see a list of ten drugs that failed in Phase III in 2010, supposedly the least risky phase, compiled by Fierce Biotech). With the major pharma companies scrambling to find a formula for profitability, smaller companies crashing and burning (or rarely getting bought out), and venture capitalists running for the exits, entrepreneurs should steer clear of drug discovery and development. Or should they?
Entrepreneurs see challenges as opportunities and their companies became leaner and meaner to reduce costs and risks. The “virtual” company became the preferred mode of operation and used just-in-time contracting to lower overhead costs and to generate proof-of-concept data to enable their go/no-go decisions. Now start-ups and established companies alike use contract research organizations located down the street or across the globe and tout their decision-making acumen. More recently, entrepreneurs and their backers are using a specific type of virtual company structure, in which the company is a stand-alone limited liability corporation (LLC) with the goal of bringing a drug candidate to a clear and fundable “value inflection point” or closing up shop before major money is needed. The LLC structure makes it possible and attractive for a big pharma to buy into the company as a investor and get an option to buy the company and its drug after proof-of-concept and value is shown.
There are a handful of companies using this approach, but other than garnering their start-up investment money, none has proved out the concept. Here in Boston, Nimbus Discovery was founded in 2009 and counts as one of its investors the cautious Bill Gates. The company uses the LLC model in that each drug development program is in “its own dedicated subsidiary” that can be acquired outright through purchase “without the costly infrastructure, operating burn rates, and downstream obligations associated with traditional acquisitions or licensing deals” (Nimbus Partnering). Also locally, Exponential Pharma Partners (EPP) was started in 2009 to cost-efficiently develop early-stage drugs and in the past two years has set up two LLC ventures. In 2010, EPP and Embara NeuroTherapeutics partnered to further the clinical development of a combination drug, EMB-001C, for treating cocaine dependence, and EPP started LipimetiX based on AEM-18, a peptide which “is being developed for genetically induced refractory hypercholesterolemia, an orphan indication that leads to early cardiovascular disease.” Another company using the LLC structure is Resolve Therapeutics of Kirkland, WA, whose focus is a drug to treat lupus, an orphan disease, that was licensed from the University of Washington. Resolve’s CEO, Jim Posada, offered a ballpark estimate of their costs when he was quoted in May of this year: “the model can only really work in specific types of diseases, where it is possible to create value with a new drug after only $10 million to $15 million of early stage testing.” The National Organization for Rare Diseases says there are more than 7,000 rare and orphan diseases afflicting about 30 million US citizens, and there are hundreds of millions around the world suffering from diseases with no or inadequate therapeutics. In other words, there is a lot of opportunity to be entrepreneurial.
So what do I think is needed to take the LLC short cut? Start with a drug prototype that:
Next:
Aspiring biotech entrepreneurs often try to find a novel technology of their own that will lead to commercial success. But, as the career of Itschak Lamensdorf suggests, sometimes the best way to be both innovative and successful can come from facilitating the projects of others.
When Lamensdorf completed his post-doc studies at the NIH in 2000, like many other young grads, he plunged into the business world with the ambition of using basic research that he had worked on as the foundation for a commercial start-up venture.
The company he initiated was based on a modified antisense platform technology for CNS drugs. But after several years of work in a business incubator, he abandoned the project when the funding ran out.
“If I had the managerial skills then that I have now, I would have been able to raise the money,” he observes with hindsight.
However, instead of giving up on being an entrepreneur when his start-up closed, Lamensdorf decided to develop a business based on providing a service that his fledgling company had been unable to find.
“There was an unmet need for a CRO (Contract Research Organization) with a completely different model than any that existed at the time,” he explains.
“What was missing for me was a company that could provide not just technical services but a body of knowledge that would include all the scientific, regulatory, pre-clinical and clinical consulting services and ‘execution’ tools that meet the specific needs of a company,” he recalls.
Starting out by working from the living room of his apartment, Lamensdorf founded Pharmaseed, a company based in Ness Ziona, just south of Tel Aviv, that today comprises about 40 employees, with more than half of the staff Ph.D.s.
“Instead of providing technical services like a commodity, we developed a model that leverages the power of a highly knowledgeable and experienced staff with creative and innovative ideas of their own,” he says.
He notes that he has not been afraid to take a stake in some of the inventions that Pharmaseed has nurtured. “We now have equity in one company that is repurposing drugs for Parkinson’s disease and in another with an innovative drug for ischemic stroke.”
Lamensdorf does not regret foregoing a career in either academic research or with a biotech company working in a single area. “What I find exciting about being in a company of this kind is that as I am at the interface of academia and industry. Consequently I work in a sort of bilingual way in the languages of both worlds. It’s true that I don’t have the singular focus that comes with an academic career but I get a lot of satisfaction out of being exposed to a broad range of fields.”
Pharmaseed today offers specialized expertise in a number of areas such as CNS diseases, inflammatory diseases, oncology and stem cell research. Lamensdorf points out that the company is constantly moving into new areas and offering new services “as more and more of the tools of the high-tech world are incorporated into biotech studies.”
“I envision a day when a sponsor will be able to conduct a pre-clinical trial with us through cloud computing interphase,” he says.