Why Universities Are Key to the Future of Biotech, and How UCSF’s Chief is Showing the Way

10/3/11Follow @xconomy

These are hard times at universities in America. State support is dwindling, tuition is booming, and federal research dollars are in jeopardy. Morale has taken a beating.

But U.S. academic research centers are still the driving force for innovative new medicines, like always. And anyone who cares about U.S. universities should pay attention to what’s happening at UC San Francisco under the leadership of chancellor Susan Desmond-Hellmann.

Desmond-Hellmann, a biotech industry star from her days running drug development at Genentech, has her work cut out in her third year as UCSF’s chancellor. Like any executive arriving on campus, she’s had to learn a lot in a hurry. UCSF is a complex, 23,000-employee enterprise that does everything from studying the basic functions of stem cells to helping discover new drugs to treating patients. Starting in August 2009, she’s had the unpleasant job of overseeing furloughs, layoffs, and multi-million-dollar budget cuts. She’s said no, repeatedly, to promising new scientific initiatives.

But she hasn’t been stuck on the defensive the entire time. UCSF has struck a number of creative partnerships with companies like Pfizer, Sanofi, and Bayer, which are being closely followed at other universities. UCSF has also found a way, with the help of some big-time philanthropy, to break ground on two ambitious projects—a $1.5 billion hospital complex and a $200 million neurosciences research facility in the Mission Bay district. There in the same neighborhood, the university has also continued to support QB3, an incubator where academic scientists are starting companies that test whether their ideas just might have what it takes to become new drugs, devices, or diagnostics.

The Mission Bay cluster has been growing for years, and Desmond-Hellmann plans to describe her vision for what it can accomplish at noon Pacific time tomorrow in her “State of the University” address. I spoke with her about some of these themes in a wide-ranging interview at her office in UCSF’s Parnassus Heights a little more than a week ago. True to her disciplined business training, Desmond-Hellmann plans to outline a 3-year plan with measurable goals that she says will make her and her team clearly accountable for delivering what they promise. If all goes according to plan, she says UCSF will celebrate its 150th birthday in 2014 with a greater capability to advance health than it has today.

UCSF Chancellor Susan Desmond-Hellmann, at her office

“I’m sticking my neck out there and saying the world is changing very quickly, and yet our aspiration at UCSF is to be a world leader in health science innovation,” Desmond-Hellman says. “If that’s our aspiration, what are we going to do to that end? At a terrible time, with a rotten California economy, a rotten national economy, a rotten state of the world, people will see there was a medical center, an academic center in California, that positioned itself to have its best days.”

To see how far UCSF can go in this mission to deliver better healthcare to people, Desmond-Hellmann and her team have been challenging a lot of basic assumptions about how things get done. The university has already been pushed to operate more efficiently wherever it can, like, say, sharing one shiny new gene sequencing machine instead of buying two. But trimming around the edges and wringing out efficiency gains will only go so far.

As Desmond-Hellmann puts it:

“When you look at times of enormous stress in the system, that’s a great opportunity for people to look at fundamental things like whether we have the right curriculum for students learning how to become professionals in life sciences. What about graduate training? Is it OK that the average age for a first [basic NIH grant] is 42 years old? If it’s not OK, what is UCSF doing to address it? How much does it cost to be taken care of in our medical center? Who cares for people? How do we track what happens to patients? How are we doing in terms of safety and quality? What is UCSF really doing to say ‘here’s how life should be better.’”

Working in collaboration with pharma companies is definitely a part of the future of advancing health, Desmond-Hellmann says. Financially, these deals are small potatoes, and aren’t going to close any budget gap. Even if UCSF researchers made a breakthrough cancer drug that generates billions of sales per year, it would likely only throw off a royalty stream to the university worth a few million a year—nice, but not exactly a big deal for a multi-billion-dollar institution.

Instead, the collaborations are about improving the flow of basic research through development. Pharma companies need new products to preserve and grow their bottom lines, and they aren’t doing so hot at inventing them on their own. When budget cutters ask questions about how taxpayer dollars are spent on campus, academic centers need to be able to say something like, “We discovered a breakthrough drug that helps people live longer, better lives,” instead of just “We got a cool paper published in Nature.”

Unlike most university leaders, Desmond-Hellmann knows first-hand how much time, money, and risk is involved in creating something new to improve health. And she knows about the tensions between academia and industry. Academics rightly want to protect their academic freedom/right to publish research even when it has nothing to do with maximizing the sponsor’s revenue, or when it reflects negatively on a certain product. And businesspeople aren’t doing this for philanthropic reasons. They naturally want to see a return on their investment in the form of new product candidates.

It’s been easy in the past for both sides to go their separate ways. But the economy has taken a toll on both. Big Pharma R&D operations, rich as they may be, are feeling the same pressure to make cuts as universities. What’s needed now are the creative partnerships, where someone knowledgeable about the whole process (like maybe a Desmond-Hellmann) steps in and finds a way to more seamlessly bring together these two factions around what they have in common.

The old way of doing things doesn’t really work anymore. Often, some of the best research ideas would get handed off from academia to a company at a very raw stage of development. But few venture capitalists are funding startups at this early stage of development these days, and Big Pharma R&D has always tilted more heavily toward D than R. The economy has put more pressure on companies to tilt that balance even further away from research, and more toward late-stage development that has a chance to bear fruit in the near-term.

Universities need to recognize this is how things are. If they want to truly translate their innovations into products that help patients, they will have to carry the research a little further downfield themselves. Some Big Pharma companies have already shown they are willing to sponsor this kind of on campus work at UCSF and elsewhere.

Some academics sneer at this late-stage research/early-stage development work. It’s a cultural attitude Desmond-Hellmann wants to change. “There’s a technical competence in taking a discovery from a lab and turning it into a medicine. It’s embarrassing that people don’t honor that technical competence. You sometimes hear it called “applied” or “obvious” or some other pejoratives. But it’s my expertise. I do take that personally. There is a technical competence. It needs to be understood, put into curriculum, and valued.”

If Desmond-Hellmann can persuade her colleagues on campus to rally around this idea—that it’s about science that can impact health, not just science for the sake of more science and grants—then this initiative will be a huge success. Academia, after all, gave birth to the biotech industry in the first place during another decade of recession and malaise—the 1970s. Something equally big can be created now, despite all the economic challenges, if people in academia and industry can set aside some of their small differences and truly work together.

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