VC Rick Klausner on the Future of Vaccines, and Why Dendreon is Only Scratching the Surface

8/19/09Follow @xconomy

Vaccines produced some of the biggest advances in medicine over the past two centuries, but for most of that time, scientists couldn’t say for sure how they worked to rev up the immune defenses. “You would close your eyes and hope,” says Rick Klausner.

That era is coming to a close, says Klausner, a former global health leader at the Bill & Melinda Gates Foundation and former director of the National Cancer Institute. Vaccines in coming years will be specifically designed to do what scientists want, Klausner says. They will stimulate certain cell types that you want to prevent an illness, fight off an existing infection, or possibly kill tough cancer cells.

The vaccine wave is one of several big ideas Klausner, 57, is pursuing in the latest chapter of his career as a venture capitalist. He’s now a managing partner with The Column Group, a San Francisco-based venture firm with about $260 million under management, and a team that includes three Nobel Laureates dreaming up the best ways to apply cutting-edge biology to vaccines and other areas. Klausner helped get the firm started from his home base in Seattle, but I spoke to him last week by phone from San Francisco. He moved to the Bay Area this month to be closer to his fellow partners, and most of his portfolio companies. But he insists he’ll be back on a plane once a month to the Northwest to keep tabs on his firm’s hot vaccine prospect, Seattle-based Immune Design.

“For the first time I’ve seen, we have a path forward to use vaccines against chronic diseases and as therapeutics,” Klausner says.

Immune Design, as we have written about in these pages, was born at an auspicious moment in both the science and business of vaccines. This business is pretty straightforward: these products, which once languished in the pharma industry backwaters, made up a $13 billion market in 2007, according to Lehman Brothers. What’s more, vaccine sales are expected to grow at an 18 percent annual rate through 2011, compared with 4.4 percent projected growth for the drug industry as a whole during that period, according to Lehman. Merck’s human papillomavirus vaccine, Gardasil, as well as Wyeth’s pneumococcal vaccine, Prevnar, have proven to the industry that newer vaccines can sell at high prices—and create new billion-dollar markets.

But when we spoke, Klausner mostly wanted to talk about why the science will lay an important foundation for this industry in the future.

Immune Design, albeit still in its early days, represents some of the exciting new advances in immunology that will make for better vaccines, Klausner says. The company was formed by combining two fundamental technologies. One was a delivery system, known as a vector, from the lab of Nobel Laureate David Baltimore at Caltech. That new tool makes it possible to precisely stimulate dendritic cells, which are known for sending sentinel warning signals about pathogens to other cells of the immune system, Klausner says.

The other component came from the lab of Steve Reed at the Infectious Disease Research Institute in Seattle, Klausner says. That’s where scientists have developed … Next Page »

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