Inside a Life Sciences Industry Confab: Notes from Convergence
It didn’t bother me that my attendee badge was missing from the registration booth when I arrived at Convergence: The Life Sciences Leaders Forum in Newport, RI, last week. I suspect it was stolen by the same conference gremlins who bilked my badge at the NVCA annual meeting this spring, the 2007 BIO meeting in Boston, and several other events that I’ve attended in recent years. And though I started my stint at Convergence down one badge, I left it up a fist full of business cards, courtesy of the life sciences and healthcare innovators, executives and investors who had assembled for the three-day confab.
The gathering, organized by Boston-based Future Forward Events, produced plenty of unexpected moments, like when Genzyme’s iconic chairman and CEO Henri Termeer told attendees, during his fireside chat with Sirtris CEO Christoph Westphal, that Westphal had called him for advice during Sirtris’ negotiations last year with drug giant GlaxoSmithKline. (Read on for other tidbits from the Termeer-Westphal chat.) Unsurprisingly, much of the discussion, at least for the first two days of the meeting that I attended, centered on the dramatic changes occurring in the industry due to the dour economic climate and the ongoing policy and leadership changes in Washington, D.C. And in a change from years past (this is the sixth year for the event), everything was on the record unless the speaker clearly stated otherwise. Which means I can share many of the insights I gleaned from the panels and speakers and from my conversations during the event’s ample mingling opportunities. I even did a couple posts on Twitter during the event. Here are some highlights:
—Healthcare policy wonks were well represented at Convergence, and for good reason. The life sciences industry faces major hurdles due to policy changes under discussion at the federal level. Alan Eisenberg, executive vice president of emerging companies at the Biotechnology Industry Organization, listed the top policy issues that the industry group is following, including: proposed patent reforms and their potentially detrimental effects on life sciences firms; the regulation of generic, or “follow-on,” biotech drugs; improving the opportunities for firms in the industry to raise capital; and, perhaps most important, healthcare reform. On some of the big spending plans currently circulating in Washington, Eisenberg said: “Any one of these has the potential to suck the oxygen out of capital.”
—As I mentioned, we were clued in on some of the behind-the-scenes conversations that took place between Sirtris’ Westphal and Genzyme’s Termeer before London-based Glaxo purchased Cambridge, MA, Sirtris for $720 million last spring. Termeer told the audience that Westphal called him privately before the deal was announced to ask him whether Sirtris should accept a buyout offer from Glaxo, and that Termeer advised the younger chief executive to look in the mirror and decide for himself. (Genzyme, founded in 1981, has grown into a multibillion-dollar business in large part due to the iron will of its chief executive to remain independent of big pharmaceutical companies.) The two executives also revealed that Cambridge, MA-based Genzyme (NASDAQ:GENZ), which was an investor in Sirtris, passed when Sirtris’ bankers asked the company if it wanted to make a buyout bid of its own for Sirtris. “Henri was smart and didn’t buy Sirtris,” Westphal quipped. Here’s an audio recording of their candid conversation:
—For me, some of the most enlightening moments came during a private dinner I shared with a dozen or so life sciences executives on the first night of the conference. I got the opportunity to sit next to Ryo Kubota, founder and CEO of Bothell, WA-based biotech firm Acucela, who—prompted by others and myself—humbly shared the story behind his discovery of myocilin, a gene linked to the eye disease glaucoma, more than a decade ago. (Luke has been chronicling Kubota’s Acucela, which is in late-stage clinical development of a drug to treat dry eye.) I also sat next to John Hollway, a vice president of business development at South San Francisco-based antibiotic drug developer Achaogen, who was invited to the conference to speak on a panel on alternative sources of financing for life sciences companies. Hollway, an attorney by training, told Kubota and me how his company has raised about $100 million in grants to develop drugs for antibiotic-resistant bugs. For my part, I shared with Kubota some Yankee wisdom on how to draw the most meat from a steamed lobster.
—Back in the formal panel setting the next morning, we heard from senior executives from drug giants Merck & Co., Glaxo, and Novartis, as well as from biotech powerhouse Biogen Idec (NASDAQ:BIIB), that those companies are seeking partnerships and other collaborations with biotech firms. There was concern among some of the panelists about how the lack of available capital for smaller biotech firms could stifle the development of new drugs—especially since all the panelists’ companies look to biotechs to fill part of their own product pipelines. Chuck Wilson, vice president and global head of strategic alliances at Novartis, noted that of the 30 or 40 venture firms he met with during the JP Morgan Healthcare Conference in January, only three or four firms were still interested in starting new companies. Here’s a link to an audio file of the panel, moderated by John Maraganore, CEO of Alnylam Pharmaceuticals (NASDAQ:ALNY) in Cambridge:
—The VC guys gave everybody a sobering update on their industry during a panel on the second day of Convergence. Jeff Barnes, a general partner at Oxford Bioscience Partners in Boston, said that his firm is focused on making investments in its existing portfolio companies and isn’t raising more capital or investing in new companies. (His comments confirmed what Xconomy and others reported about the financial status of Oxford in March.) Doug MacDougall, a public relations executive who moderated the panel, attempted to provide some sunny facts about venture capital investments in life sciences startups remaining strong in the first quarter of 2009. Yet Barnes and others noted that many venture firms are pouring more money into their portfolio companies because the IPO market has been largely closed to venture-backed startups and large companies have been slower to make acquisitions than in previous times.