[Update: 1:15 pm Eastern] Lots of people in biotech think they are doing innovative things, even when they are really doing something pretty conservative, like testing a proven drug for some new use, or crafting some new way to deliver a therapy with more efficiency or convenience. But how, especially in today’s sluggish economy, do people muster up the guts, raise the mountains of cash, and find the staying power to do something truly big and unprecedented—like create a regenerative medicine based on stem cells?
Risky (or maybe reckless) as it sounds, it’s still easy to find people who are working on this exact kind of high-risk/high-reward kind of challenge. I soaked up some candid insights from some biotech cowboys on Friday during part of the Convergence Forum for life science leaders in San Francisco. This conversation generated more than a few tweet-worthy nuggets for our readers, which I thought were worth rounding up here. The speakers were John Mendlein, chairman of San Diego-based Fate Therapeutics and aTyr Pharma; Paul Hastings, CEO of Redwood, City, CA-based OncoMed Pharmaceuticals; David Perry, CEO of Palo Alto, CA-based Anacor Pharmaceuticals (NASDAQ: ANAC); and Bryan Roberts, a partner with Venrock Associates in Palo Alto.
Perry got things rolling right away with some self-deprecating humor, noting that his company uses boron-based chemistry as a platform for drug development, and he’s been reminded more than once that boron rhymes with moron. “I think I saw that on a T-shirt once,” he quipped. Roberts, not to be outdone, said he tries to invest in innovative stuff, and “later it becomes incremental.”
Since this conversation skipped around a bit, I figure it easiest to just highlight a few of the quotes below. [Update] To listen to an audio clip from the panel, click here.
—Bryan Roberts on meeting with Big Pharma: Big drugmakers often want to talk all about what they are interested in right now as a company. That’s a problem for a venture capitalist taking the long view. “What I invest in today, they don’t want now,” he said. The more important question is, “Will you still be there five years from now?”
—David Perry on mitigating risk: Anacor sought to make its first two boron-based drugs into topically delivered formulations. That way, there was less amount of the drug circulating through the bloodstream (where unpredictable side effects can sometimes sprout up). Going with the topical delivery route also enabled faster and cheaper clinical trials than with a drug that circulates through the body.
—Perry on raising money: “I have a very sophisticated approach to raising money. I talk to everybody who will talk to me.” Maybe only 5 percent will actually invest, but that’s OK, he said because to advance the company, you don’t need to convince everybody, just “the next set of people.” That means graduating from venture capital to IPO investors at some point, which his company did last month.
—Paul Hastings on how to strike a Big Pharma deal: Really innovative biotech companies need to find true contrarians within Big Pharma to support their ideas. Moncef Slaoui, chairman of GlaxoSmithKline’s R&D operation, is one. “Moncef loves to be a contrarian,” Hastings said. Stephen Friend, the former senior vice president of cancer research at Merck, was another contrarian, Hastings said. Bryan Roberts chimed in to second this idea of seeking out key individuals, saying “great decisions in this business aren’t made by groups.”
—Hastings on how to build value, both real and perceived: Find a partner to support one asset, and keep another asset wholly owned “because Wall Street flips back and forth on which strategy it favors.” He also suggested entrepreneurs develop drugs on parallel tracks so that a company doesn’t end up focused on just one asset in development, which requires a letting go of people when the project graduates out of their department, and there isn’t another exciting thing to work on at a different stage. “The best way to lose credibility is to discover things and then fire the scientists to hire development people,” Hastings said.
—Roberts on the trend in venture investing: “There’s more interest now in funding real biotech innovation than any time in past 15 years.”
—Hastings on the steely, single-mindedness it takes to actually develop something truly new, like a drug that works against cancer stem cells: This was in response to a question from an economist in the audience about whether he’s paying attention to healthcare reform, who will pay for these biotech drug innovations, and how the company can justify the high cost of its efforts. “If I listened to you, I wouldn’t be in this business,” Hastings said. “Without innovation, we are toast.”
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