SF’s Prescience Sharpens New Biotech Business Model in San Diego

12/9/11Follow @bvbigelow

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hospitalized somewhere between Beijing and Hong Kong for two to three months. “They knew I had meningitis, but they couldn’t figure out what else I had,” she recalls. “They said they didn’t think I was going to make it.”

Richter remembers thinking, “How can we send men to the moon but not be able to figure out what’s wrong with me?”

Her eventual recovery prompted Richter to think about how she wanted to spend the rest of her life. During her years at Nortel, Richter says she was involved with acquisitions, strategic planning, marketing, contract negotiations, engineering and manufacturing optimization, and general management of an IT business. And she remembers thinking, “I am not a scientist, but I am a good businesswoman. There must be a better way, a way to this [to advance new medical discoveries] that is faster, cheaper, and easier.”

With her management of the San Jose BioCenter, Richter began to develop a new model by assuming responsibility for the business operations of all the life sciences startups in the incubator. “Let’s tell these founders, ‘Hey, you’re a scientist. You should just focus on the science, because all the other stuff is just a commodity service, and we’re really good at it.”

When a group of scientific entrepreneurs decide to build a life sciences startup, Richter says they typically find that there’s no such thing as a small commercial space. They usually have to sign a long-term lease for far more laboratory space than they really need. Then they have to go shopping for all the equipment they’ll need—laboratory supplies, biosafety hoods, refrigerators, centrifuges. And then there are all the specialized needs, such as finding a source of reverse osmosis de-ionized water.

Richter says Prescience takes on these business tasks and more. After flooding from a chemistry lab inundated a small startup’s space in the San Jose BioCenter, Richter says Prescience moved the company into another suite and took over the cleanup and lab re-certification process.

“When you look at all these pieces, you can see why it takes a lot of time and a lot of money,” Richter says.

One San Diego startup CEO, G. Sridhar Prasad of CalAsia Pharmaceuticals, tells me, “The overall concept is excellent and will be extremely beneficial for startups that have deep pockets to start with.”

But Prasad says he worries the rent would be too steep for an early stage startup like his, which depends on grants from the National Institutes of Health. He says he also frets about keeping his proprietary information confidential in an incubator’s shared work spaces, and about the experience and qualifications of firms hired to operate sophisticated biomedical instruments.

[Updated to clarify terms.] Richter says she did not address pricing during a December 1 presentation at Janssen Labs. While Prescience has not yet disclosed pricing for the San Diego incubator, Richter says the firm has been developing a series of package prices that are intended to be affordable for life sciences startups, depending on the space and scientific needs of each company.  She also says Janssen Labs has a variety of safe and secure spaces to accommodate companies of varying sizes, so that companies can keep their confidential data and intellectual property secure. As part of Janssen Labs standard operating procedures, she says company employees must be trained to use the common area equipment, or they must use technicians with that expertise.

“Early stage funding in general has been taking a hit, and the life sciences in particular,” Richter says. “Because life science is so risky, a lot of venture capital has pulled out, but now you have different business models coming out. It’s changing the dynamic.”

In the meantime, Richter says she’s working to apply some of her experience in San Jose to help get the Janssen Lab incubator ready to open by next month. She also says she is encouraged by the life science sector’s “cohesive and collaborative community” in San Diego. “We just need to make these investments look a lot more attractive to VCs,” she says, “and to get everybody to beef up their activity in this area again.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • Scott Struthers

    This is a major step forward for the San Diego Biotech community.
    We all owe J&J our thanks for making this contribution.
    With over 300 people showing up to last weeks San Diego Entrepreneurs Exchange to hear about the new incubator and our other panelists, obviously this is something of great interest to local entrepreneurs.
    Anything that reduces capital barriers to asking scientific questions will help young companies grow and rebuild our economy.

  • http://www.sdentrepreneurs.org Deborah Slee

    300 people attended the last SDEE event “Being Fundable and Getting Funded”. The evening started with an overview of the incubator model that J&J is proposing, by Diego Miralles (J & J, San Diego site head) and Melinda Richter (Prescience). This is the first life science incubator in San Diego to offer short term access to a fully equipped facility, with an operations team in place. In an incubator, life science companies can get started quickly, and focus on advancing the company’s science and products, without the expense of independently operating a facility. The incubator model is becoming essential for start-ups in today’s economic climate, and the Janssen Research Laboriories will be a great asset for San Diego entrepreneurs.