Two Simple Ways to Revitalize Seattle Biotech

2/9/09

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Bristol-Myers used to have a branch of their Pharmaceutical Research Institute here in Seattle, but it was shut down in 1997. Also, Merck recently announced that it was closing down its Rosetta Inpharmatics group and moving the operations to Boston. These last examples illustrate the problem with being a “branch office” of a large institution and not the world headquarters. Seattle needs to do more than merely serve as a branch office for Big Pharma. So this is only part of the solution, leading me to a second proposal.

Proposal 2 – Fund a private, nonprofit pharmaceutical organization that, in contrast to the Fred Hutchinson Cancer Research Center or University of Washington, works on drug development, not basic research, as the primary goal. Software entrepreneur Phillip “Terry” Ragon and his wife just gave $100 million to the Massachusetts General Hospital to form a research institute focused on developing vaccines for AIDS and other infectious diseases. Wouldn’t it be wonderful if one of our own homegrown billionaires decided to commit the same sum of money to a new, privately held drug company? Let’s just take a minute to envision the benefits of an independent drug company. Its mission could be led by science and unmet medical needs instead of marketing plans. It could resist the financial pressures that drive the development of “me-too” drugs and also force a focus on a search for blockbusters at the expense of other diseases that could be treated but might not bring in huge revenues.

Being privately held and nonprofit, this company couldn’t be acquired in a hostile takeover by dangling large wads of cash in front of shareholders, since there wouldn’t be any. Effective treatments could be sold for much less than other drugmakers would have to charge, and a large share of the revenues would be plowed back into research and development instead of advertising and marketing. Finally, such a private, nonprofit company could develop drugs on a longer timeline, if needed, than currently favored at startups. This lack of pressure to get a drug into the clinic ASAP would enhance the probability the drug might actually be successful in clinical trials. No stock options, just good jobs for people who want to dedicate themselves to a mission, not the next million.

This new company could be set up along the lines of the nonprofit Institute for One World Health in San Francisco, which mostly focuses on diseases of the developing world. The institute’s mission essentially requires it to develop inexpensive small molecule drugs, preventing it from accessing the more expensive-to-develop protein drugs.These products also have much more stringent storage, shipping, and administration requirements. But a well-funded, nonprofit biotech company in Seattle could make some of these types of drugs for a large number of orphan diseases (defined by the NIH as those that effect less than 200,000 people in the U.S). This could be a powerful idea for tackling a whole host of diseases that can’t be treated well with conventional small-molecule drugs.

Where might this company find drug candidates to work on?

—License intellectual property from a university or other academic research center.
—Buy a drug candidate from one of those promising but underfunded biotech companies that are likely to go out of business this year.
—Buy a drug development program that Big Pharma has chosen to abandon because they have either decided to narrow their disease focus, or because the market is too small to generate sufficient revenue to feed their huge organizations. For example, Pfizer has announced recently that it plans to sell off some 100 drugs from their development pipeline. While a drug that brings in $100million in annual sales can’t be begin to make up for the upcoming revenue decline when atorvastatin (Lipitor) loses its patent in 2011, these relative “niche” drugs may not mean much to Pfizer, but they could pay for a great deal of research and development at a much smaller company.

Seattle has established itself as a powerhouse in basic biomedical research, with huge amounts of grants flowing to the UW, Fred Hutchinson, Seattle Children’s, PATH, Seattle Biomedical Research Institute, Pacific Northwest Diabetes Research Foundation, Benaroya Research Institute, and others. However, success on the commercial side has been much more limited, and at times transient. Financial returns from investments in the state’s Life Sciences Discovery Fund are still years away. Hopefully the proposals above will spark a dialogue that will ultimately help to rejuvenate our local biotech community.

Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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  • Johnny T. Stine

    Well said Stewart….

    So proposal two – something very similar – is being done up north in Vancouver, BC. It’s called the CDRD and they have a product development arm called the DDI. Natalie Dakers is the CEO of the CDRD and I think the model is very interesting and similar to North Coast Bio, ie. generate as much value possible internally and THEN send it out for venture series A fundraising.

    A third proposal …..go back to our roots – start a company in a garage. The technology has improved so dramatically that it can be done and it’s happening here on our very own North Coast.