Build it Boldly, and Pharma Will Come—and More Wisdom from Boston’s Biotech and Pharma Elite at Xconomy Forum

11/5/09

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be part of the Boston innovation ecosystem (which should be good news for entrepreneurs and investors starting biotechs here). “We are privileged to be in a place where innovation thrives—it’s a crucible of innovation,” said Dunsire. “To me, being here is very important to connecting with other sources of innovation.” Indeed, Millennium operates as the cancer therapeutics arm of its parent company, Takeda, the Japanese drug giant that purchased Millennium in a blockbuster $8.8 billion buyout in May 2008.

Maggie Flanagan Leflore, managing director at Med Immune Ventures, noted during a separate panel that the West Coast is taking notice of the growing pharma presence in the Boston area. “The sense in San Francisco is that Boston is eating San Francisco’s lunch because of the growing pharmaceutical presence here,” said LeFlore, who was in San Francisco last week. “They don’t call it the Hub for nothing.”

—Don’t waste your time with me-too drugs. There was a time when drug companies could find investors to support the development of products that offered a minor improvement over existing therapies. “The era of the me-too drug is behind us,” Dunsire said. At Millennium, she said, the company quickly ends development of a drug if early tests show that the treatment is unlikely to significantly improve the lives of patients. Conversely, Millennium’s bone marrow cancer drug bortezomib (Velcade) has greatly improved the health of patients, with 2008 sales of more than $1.1 billion.

—Understand the different philosophies of the venture arms of pharmaceutical companies, because they are becoming more popular sources of early-stage financing for young biotechs. Campbell Murray, managing director of Novartis Venture Funds, and MedImmune Venture’s LeFlore explained that there are firm firewalls between their parent organizations and the portfolio companies in which they invest. So biotechs that accept investments from pharma-affiliated venture firms can expect many of the same terms as they get from traditional venture backers whose sole purpose is to generate returns on investments. Jean George, managing partner of Advanced Technology Ventures, noted that her firm did a survey that showed pharma companies were investors in about 10 percent of 191 recent Series A and B rounds closed by biotech firms. “We used to always ask whether we wanted pharmas involved in those companies,” George said, “and that’s changed.”

PharmaVenturesPanel—A big question for biotech investors and entrepreneurs is when the IPO window is going to reopen for venture-backed companies. Murray noted that prior to 1999, two-thirds of biotech exits were achieved through IPOs, but since then the mass majority of exits have been by way of M&A transactions. This has a lot to do with the lack of appetite among public investors to make bets on biotech IPOs, especially after they’ve been burned on previous ones. (See Luke’s story about how Seattle-based biotech Omeros’ badly performing IPO could adversely impact other companies seeking maiden public offerings.)

—Don’t be afraid to tell your story far and wide. “We were not a stealth company,” Westphal joked. “We were out there telling our story to the media and investors. Within 18 months of founding, we started meeting with people on the [public equity] buy-side in Boston.” Sirtris was also featured on Barbara Walters and graced the cover of Fortune Magazine, among other high-profile media exposure. Westphal and his scientific founder David Sinclair of Harvard Medical School are well practiced at talking about how their company is focused on activating genes that control aging to treat diseases. “A very easy story is an important thing.” Westphal said. “Straightforward and simple stories are good—if they are true.”

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