Biogen Idec, Vertex, and Genzyme Try Different Ways to Skin the Innovation Cat
Back in July, Bob had an intriguing conversation with Rainer Fuchs, a Biogen Idec VP on a mission to find new ways for the Cambridge, MA-based biotech giant to tap into ideas that could help fill its pipeline. Fuchs’ answer was the Biogen Idec Innovation Incubator, a quirky spin on the incubator model that doesn’t aim to create new companies. Instead, as Bob put it: “It’s more like a farm system, backing promising ideas that might some day be called up to the big leagues: namely, Biogen.”
Well, today Biogen (NASDAQ: BIIB) is announcing the first player in its farm system—a company called Escoublac that’s working on turning science from the Columbia University Medical Center into treatments for diabetes, obesity, and other metabolic disorders. As Fuchs explained this summer, the incubator will supply such companies with office and lab space, equipment, business and financial help, advice from Biogen’s own scientists, and up to $10 million in funding. In return it will take no more than a 50 percent equity stake. But, unlike in traditional venture deals, the home run for Biogen isn’t making a big exit via an acquisition or IPO—it’s getting a big bolus of new drug candidates to keep Biogen’s pipeline flowing.
That’s one way to play the game, but a story in today’s Boston Globe points to a couple of other tacts currently being taken by local biotech leaders. Cambridge’s Genzyme (NASDAQ: GENZ), for instance, which already has a venture arm that makes traditional investments in startups (as does Biogen, through its San Diego-based New Ventures group ), has been considering creating a “virtual incubator” that would provide seed funding and technical support but allow companies to remain physically independent of Genzyme. The idea here, Alan Walts, managing director of Genzyme Ventures, told the Globe, is that being housed within the confines of a particular company might hinder new firms’ abilities to forge collaborations with others.
Cambridge neighbor Vertex Pharmaceuticals (NASDAQ: VRTX), meanwhile, is evidently looking more directly to academia for new science that could translate into valuable drugs. According to the Globe, Vertex is set to announce that it has forged a relationship with Harvard University in which the company will fund research into a host of disease areas—without limiting the university researchers’ abilities to publish their work or making them sign away rights to the technology they develop with Vertex money. (Vertex gets first dibs on licensing the technology if Harvard decides to go that route.) Vertex CEO Joshua Boger told the Globe that Vertex has already committed several millions of dollars over the next three years to five Harvard projects under the agreement.
Having spent a speck of time in academic research myself long ago—and having seen first-hand researchers’ hand-wringing over the strings normally attached to corporate money—I’m most curious to see how the Vertex plan shapes up. But I suspect that what these companies will ultimately discover is that there’s more than one way to skin the innovation cat.