Building a biotech is (really) hard. But if you’re doing to do it, be yourself. Don’t take yourself too seriously. Wear sneakers if you feel like it. Near-death experiences happen to everyone along the way—embrace them and learn. And if your initial hunch is that the company’s founding idea is insane, it’s probably worth pursuing.
These were some of the lasting impressions from the three stars of our latest biotech event, “Boston’s Life Science Disruptors.” The audience who joined us on Wednesday at the Novartis Institutes for Biomedical Research got quite a treat—the founders and lead investors of Genocea Biosciences, Moderna Therapeutics, and Bluebird Bio (NASDAQ: BLUE) gave all of us an in-depth look at the ups and downs they’ve all faced trying to make their way in a tough industry with exceedingly long investment timelines and a high failure rate. None of these companies have truly made it yet, so to speak, so this wasn’t so much about trumpeting their successes—it was about the challenge of taking a transformative vision, getting people onboard to follow you, and making it a reality. These are the kinds of stories you won’t hear on an earnings call.
Big thanks to our speakers: Darren Higgins and Kevin Bitterman for Genocea, Stephane Bancel and Noubar Afeyan for Moderna, and Neil Exter and Nick Leschly for Bluebird (pictured above, left to right). Thanks also to Novartis, our event host, and our sponsors: BDO, Cubist Pharmaceuticals, Health Advances, Mintz Levin Cohn Ferris Glovsky & Popeo, and the Kauffman Foundation.
And of course a special thank you to KeithSpiroPhoto, courtesy of Kendall PRess, for the photos. We’ll have more of those in a slideshow on Monday.
With that, here are some of my takeaways from a really informative night:
—“This is something he had put together in his lab, essentially by himself, without any [National Institutes of Health] funding because he couldn’t get anyone to fund his crazy idea.” Harvard University professor Darren Higgins had a tough time convincing people to invest in his vision for a new wave of vaccines—a quick-hit production platform designed to create vaccines that trigger T cells to fight foreign invaders, something that no approved vaccine can do. Higgins, in fact, says that in pitching the idea to potential investors many years ago he received “anywhere from measured apathy to complete disdain for wasting someone’s time.” Apparently this revelation even took Kevin Bitterman, a principal at Polaris Partners, by surprise: While Polaris was the firm that made a seed investment in Genocea, it came, he joked, “I guess after a lot of people said no—I didn’t really know that.”
—“We had three different opportunities to merge with an adjuvant company.” Vaccines are made up of an antigen that tells the immune system what kind of things to attack, and they are usually combined with an immune-boosting compound known as an adjuvant. Bitterman says that Genocea had offers to merge with entities making those adjuvants at various points in its development. But rather than split up the ownership pie through a merger, Genocea chose to instead in-license an adjuvant from Sweden-based Isconova AB that had been in the clinic, and had been more developed, to help limit the already substantial risk Genocea was taking.
“I think that was a good decision based on watching the paths of some of the adjuvants we could have merged with,” Bitterman said.
—“I looked at the data and said, ‘you’re crazy.’” This was Stephane Bancel’s first reaction when Flagship Ventures’ Noubar Afeyan pitched him on the idea of using messenger RNA to potentially create a whole new class of drugs that are cheap and easy to produce, showing him slides of mouse data. Afeyan’s response: “Forget about all your questions and your natural tendency to think this is not possible—but just assume for a minute that this is possible?”
Bancel, who had spent much of his career at big firms like French diagnostics company bioMerieux, was intrigued—he liked the idea of being at a startup “from the get-go.” But he’d only join if a single VC backed the company, rather than a syndicate. Flagship Ventures acquiesced, and in return, Bancel promised to raise money from other sources.
—“People wouldn’t hear ‘m’ very well, they’d hear RNA.” Moderna made a deliberate decision to say absolutely nothing about its technology for almost two years. No press releases, no website. It was tough for Moderna to recruit talent. But Moderna has been very careful because of how new its science is, cognizant of the high promise and past failures of gene therapy and RNA-interference drugs—two methods Afeyan said people were often comparing Moderna’s technology to.
“We couldn’t avoid people saying ‘Well, isn’t this like gene therapy?’” he said.
Moderna itself kept expecting to find holes in the technology, so Flagship kept putting small amounts of money in, and Moderna stayed quiet, wary of overpromising or trumpeting itself as the proprietor of a whole new class of treatment, only to flop.
“The stealth part actually was as much offensive as it was defensive,” Afeyan said.
—No Pascal, no deal. Even though Moderna was a little biotech startup, Bancel made it very clear that there would be no partnership with AstraZeneca if he didn’t get a face-to-face meeting with its CEO, Pascal Soriot.
“I told the [business development people] if I don’t see Pascal, because there’s no engagement of a CEO behind this new technology, I don’t want to partner with you—you are not the right partner for [us].”
That meeting happened (as we explained in March), and Bancel was very realistic about the prospects—he warned Soriot, as he does all of his investors “this might never work—you realize you might lose all of your money.”
Nonetheless, the reward was worth the risk. Moderna ended up with a huge check for $240 million upfront that gave it the chance to really begin building its business.
—“We were probably not the first and only company to look at this—we were probably the last.” Bluebird is really the successor to a 21-year-old gene therapy company known as Genetix Pharmaceuticals, which had been leaning on bridge loans to survive. Third Rock Ventures was doing diligence on it when a paper was published in 2010 showing signs that its gene therapy might have a profound effect, in humans, on a rare disease known as adrenoleukodystrophy, or ALD.
“We decided, let’s look at it with a fresh pair of eyes—let’s look at it with Genzyme, they were the 800-pound gorilla in gene therapy at the time,” said Bluebird CEO Nick Leschly, who at the time was a Third Rock partner. “If they can get convinced that they can manufacture this virus, then we can get convinced that we could take that clinical data and go for it.”
Third Rock’s initial investment thesis was if the therapy could work for ALD alone, it was enough to take the risk, and “everything else was gravy,” according to Leschly. But it was very concerned about the manufacturing of the viral vector needed to perform the therapy. When Genzyme decided to co-invest and perform extensive due diligence on the company’s manufacturing process, Third Rock decided to move ahead.
“[That] gave us significant comfort in the deal,” said Third Rock partner Neil Exter.
—“It was a dark, gloomy place—you walked in, and you were depressed.” One of the initial challenges Third Rock faced was to change the culture of then-Genetix—it was barely surviving, and needed an overhaul. The firm let go all the employees except two. It then began to build it back up, and renamed it, of all things, Bluebird.
“It had nothing to do with gene therapy—nothing to do with anything other than ‘what’s that about?” Leschly said. “That was sort of the angle.”
Leschly spoke to trying to “reset the passion” for what newly-named Bluebird was trying to do. So he took the leap himself. A few months into his initial role as interim CEO, he left Third Rock to head the company, and instilled a culture giving employees the freedom, for example, to wear what makes them comfortable.
“Let people be themselves, they’re much more productive,” he said. “For me, it’s [about] being comfortable, and also to set a tone of let’s not take ourselves too seriously—because what we work on is extremely serious.”
—“The good news is, it was a catastrophic failure.” Leschly recounted that Bluebird’s first manufacturing run to create a viral vector was a complete bust—he got a call from his chief scientific officer, who told him it had produced no virus whatsoever.
“That was the best thing that ever happened to Bluebird,” he said.
Leschly, who had just traded a steady job in venture capital for a gamble on Bluebird, said that the near-death experience was a catalyst. He gathered every Bluebird employee into a room and told them, “we are toast until we figure out what’s wrong,” likening the company to Apollo 13 hurtling towards the Earth destined to crash. He says from that moment on, everyone stepped up, and the science and manufacturing behind the company shored up in kind.
“As painful as that was, it allowed us to get to another level,” he said.
—“Orphan is what got us in the room, and gene therapy was the explanation.” Given the failures of gene therapy in the past, how was Bluebird able to raise so much money from both public and private investors? Leschly notes that Bluebird had to be careful in the way it told its story to generate excitement rather than fear. To do so, it started with the rare disease it was going after, rather than the method it was using to do it.
“We needed to retrain peoples’ receptors from not running to the [other] side of the room when you heard the words gene therapy to, ‘just hold on, let us tell you the data,’” he says. “So it really became gene therapy at the intersection of orphan diseases very quickly.”
What Bluebird didn’t anticipate, however, was that gene therapy “all of a sudden got interesting.” Large pharmaceutical companies started investing in the field again, and it woke investors up, and buoyed Bluebird as it tried to raise more cash—ultimately carrying out one of the most successful biotech IPOs this year.
“I’d love to say it was planned. No, it was good timing I think with a good story, and that combination led to a successful IPO,” he said.