Where Are Tomorrow’s Blockbuster Biotech Drugs Coming From? You Might be Surprised

3/14/11Follow @xconomy

(Page 2 of 2)

enthusiasm that attracts bright young scientists and businesspeople who want to be part of something historic and to help build on that legacy.

Before I went too far in concluding that the Bay Area’s regional biotech supremacy is in jeopardy, I thought I’d get another point of view from someone in the trenches—Tony Coles, the CEO of Emeryville, CA-based Onyx Pharmaceuticals (NASDAQ: ONXX). His company has gone through a similar internal exercise, mapping out which drugs in the works stand to make the biggest long-term impact.

Coles added two drugs to my list that he thinks have similar potential—Genentech’s pertuzumab for cancer, and Xoma’s XOMA-052 for diabetes. With a little nudging from his spokeswoman, he also nominated Onyx’s carfilzomib for multiple myeloma, although he agreed that it doesn’t fit my criteria since it’s a second-in-class molecule attempting to one-up the pioneer in its space—Millennium: Takeda’s bortezomib (Velcade).

In my mind, the drugs he added require more proof from clinical trials. But the more important question I wanted to ask Coles was whether he thinks the San Francisco Bay Area is still poised to lead biotech drug innovation 20 years out.

The short answer is yes. Coles has lived “all over the place” in his biotech career, including about 10 years in Boston, before moving to the Bay Area, where he has served the past three years as the CEO of Onyx.

“While there is very exciting stuff in Boston, there’s nothing like the spirit of possibility and invention that absolutely permeates the Bay Area,” Coles says. “It’s very energizing.”

All of the key ingredients are still in the Bay Area to create those next Avastins and Herceptins, Coles says: the basic research at UCSF, Stanford University, and UC Berkeley; the venture capital; the experienced managerial talent pool; and the entrepreneurial spirit that convinces people they can succeed in a business where 90 percent of drugs fail in clinical trials.

I see all the ingredients Coles is talking about. I’ve lived and worked in San Francisco, Boston, and Seattle in recent years, and I’d say all the key ingredients for real breakthroughs are in all three places, to varying degrees. To my mind, that means one or two places won’t dominate the future of biotech, and that we are really headed toward a more geographically distributed industry.

I’d love to hear your thoughts on where you think the blockbusters of tomorrow are likely to come from, and why, and especially if you can point to other centers of biotech I haven’t mentioned. As always, I’d love to hear your thoughts posted in the comment section below. Or even better, let me know what you think at UCSF’s Mission Bay campus on Wednesday night. See you there.

Single Page Currently on Page: 1 2 previous page

By posting a comment, you agree to our terms and conditions.

  • http://www.palatuccisearch.com Chris Palatucci

    Another great piece, Luke. Two comments:

    In my days of licensing, our strategy was to keep abreast of developments across the industry, specifically because we did not think it was useful to “place bets” on where the next valuable discovery would come from.

    Second, I think it’s about time that tech transfer offices are getting on board. I dealt with many, many offices across the country. Some were efficient and business minded, some were a disaster. I worry that it might be a little too late, though, with Bayh-Dole under mounting pressure. Universities are not in the business of commercializing technologies – that’s what industry is for. Institutions that tried to create ersatz VC firms or change their tech transfer offices to “commercialization offices” were wildly unsuccessful. However, it serves society much better if universities actively seek commercial partners to take these discoveries from the dusty halls of academia into the hands of the public. I wish them luck.

  • Jason Chew

    Totally agree. In my investing, very few from bay area. As an SF native, it’s disappointing. But in my view, may be due to a range of factors from large established biotechs such as Genentech buying out promising early stage companies to talented individuals pursuing the hi-tech life over biotech.

  • http://www.lacertabio.com Lacerta Bio

    I really wish we would all stop focusing on “blockbusters.” There are a lot of unmet needs across many diseases that will never result in a “blockbuster.” Just because a drug is not a blockbuster it does not mean it is unsuccessful clinically or financially. I often wonder how many non-blockbusters with real therapeutic value are never developed due to these mega-financial reasons.

    I understand that drug development is expensive and difficult, and that VCs want a return. But blockbusters should be the exception, not the rule. We need more therapies in areas such as Pain Management and ADHD that can help more people, even if they are not blockbusters. Having fewer, high priced blockbusters is not a viable long-term strategy for the industry or its investors.

  • http://www.molecularfuture.blogspot.com Tim Gallagher

    With only ~20 NDAs/year (with many of them just derivatives), no geographic area looks good in a snapshot. Instead, take a longer view of the Bay Area, particularly some of the firms that have cashed out: Sugen (which contributed Pfizer’s Sutent), and antibody companies Abgenix (the origin of Amgen’s Vectibix) and PDL.

    Also, to add to your list, I believe Exelixis has XL-184 in P3 or later, and I think you can count Onyx’s Nexavar, except its’ approval may not be recent enough for your analysis.

    And I hear a small local firm named Genentech may have developed a few innovative therapies ;)

    From my view – 2000 miles from SF – the Bay Area is far and away the leading font of innovative therapies. This will probably accelerate once Genentech folks begin recycling.

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    @Jason—interesting thought there about talented young people pursuing high tech careers instead of biotech. I have some thoughts on this as someone who edits a lot of stories about tech, yet concentrates my own writing on biotech. Maybe there’s some future grist there for a column.

    @Lacerta—I hear what you’re saying about the emphasis on blockbusters. I think there’s plenty of room for drugs that are scientifically and clinically important, but maybe only worth $100 million or $200 million a year in sales. There’s something really wrong with the business model if no one wants to invest in drugs like that. The markets that you mention, though, are very big and attractive—I just don’t think there’s been major scientific innovation there in a long time.

    @Tim—I thought about Exelixis’ XL184, but the data is still too early to say it’s really on the cusp of blockbuster status. I will also be curious to see if this latest wave of Genentech alums will re-populate the Bay Area with more entrepreneurs creating innovative new drugs.

  • Andre

    Where does San Diego fit in? There hasn’t been a much growth lately, but…

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    Andre—good question about San Diego. The only locally-generated drug that I think is close to fulfilling the scientific, clinical, and business criteria listed above would be Isis’ mipomersen for cholesterol-lowering. But there are still quite a few questions on mipomersen that I’m not sure about, like pricing, and how widely it will really be used. Amylin’s Bydureon looked a year ago like it was on this track, but has really been hurt by the FDA delay and the latest DURATION-6 clinical study.