The Missing Ingredient in Today’s Biotech: Guts
People in the biotech business (most, anyway) aren’t delusional. They know the odds are stacked against anybody who dares to develop a new drug. But even during the darkest days of recent economic history, December 2008, I heard a seasoned executive explain why the U.S. was, and would remain, the leading place in the world for biotech.
It was about attitude.
“Europeans always want to focus on the 100 reasons why something won’t work,” Bruce Carter, the British-born former ZymoGenetics CEO said. Americans, he went on, know the 100 reasons why a drug probably won’t work, yet “are willing to look at the one reason why it will.”
I’ve been wondering lately whether this is still true, whether biotech has lost its nerve, its anything-is-possible swaggering attitude. Sure, everybody tries to cast their companies and products in the best possible light, that will never change. But deep down, there’s a lot of lingering insecurity. People (me included) keep saying things like the venture capital model for biotech is broken, the IPO market is cruel, Big Pharma is slowly imploding, everything must be outsourced to China and India, young scientists can’t find jobs, drug price controls are inevitable, and the FDA is smothering life sciences innovation.
My job as a journalist requires me to have a well-tuned BS detector, to be skeptical of those who say they can overcome all the odds. But lately I can’t help but wonder, where are the biotechies today who really believe in themselves, and are willing to bet everything that they will beat the odds and do something remarkable?
There is a lack of scientific courage running through biotech today. That’s what Steve Ertel, a senior vice president at Cambridge, MA-based Acceleron Pharma, said on a panel that I moderated last month at the Biotechnology Industry Organization convention in Washington, D.C. Carl Weissman, a Seattle-based VC who invests in biotech startups with disruptive potential, gave an emphatic “yes” when I asked him if he thinks the industry is lacking in guts. Kevin Starr, a partner with Third Rock Ventures in Boston, made this basic point in a different way a few weeks ago, when he talked about the kind of culture Third Rock has worked hard to instill in the more than 20 biotech startups it has founded in the past four years.
“What you need to create is life in an enterprise where there’s a ‘nothing is impossible’ attitude, and that assembles the right set of complementary people together to turn an idea into something that’s great,” Starr says.
It struck me as kind of an odd thing to hear from a venture capitalist. I’ve covered the industry for the past 10 years, so I’ve only heard tales about biotech culture from the years before then. But my sense is that investors didn’t need to instill a “we-can-do-anything” attitude in the DNA of biotech companies. The entrepreneurial spirit was driven partly because of the exciting new technologies of the day, coupled with charismatic industry founders, and an only-in-America appetite for high degrees of investment risk and reward.
What’s really ironic here is that some of the most truly exciting things in biotech’s 35-year history are happening right now—at the precise moment when there’s so much timidity flowing through the business. Scientists are sequencing entire human genomes for $5,000 and the price is only going down, clearly paving the way for a new wave of more predictive diagnostic tests. The biology of cancer is getting much clearer, and the drugs are starting to get much better. People with rare diseases, long ignored by the pharmaceutical industry, have legitimate reasons to feel hopeful about a lot of new treatments in the pipeline.
Third Rock is one clear example of a venture firm that has shown that the “anything is possible” attitude can still be profitable. The firm was founded in 2007 to make really risky, far-out bets on companies tackling things like cancer metabolism, epigenetics, whole new classes of protein drugs, and novel treatments for rare diseases. The final report card isn’t in yet on Third Rock’s performance, since venture investments take a long time to mature, but some of its first portfolio companies like Agios Pharmaceuticals, Alnara Pharmaceuticals, and Ablexis have all struck quite lucrative deals.
The firm’s strategy had to look like insanity to many people during the recession, when the masses were turning conservative. Yet by investing big when others were hunkering down, Third Rock has had its pick of the scientific litter, and shown that it knows how to turn those ideas into valuable properties that others in the industry will buy.
Certainly there are other venture funds out there who have shown they still have an appetite for high-risk, high-reward ideas—Arch Venture Partners, The Column Group, and Atlas Venture are a few—but Starr acknowledged that Third Rock finds it difficult sometimes to find VC firms willing and able to join investing syndicates.
Hearing that sort of thing makes me wonder about the long-term health of the industry. If the industry–VCs, scientists, entrepreneurs, everybody—can’t get the mojo back, then we could be sitting around with a lot of scientific insights in the lab that nobody really knows how to turn into products for human health. Everybody will be fixated on the 100 reasons why something won’t work, and failing to see the one reason why it might.