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What Seattle Needs (Part 3): Working Together to Revitalize Biotech

Opinion

Xconomy Seattle — 

These are incredibly exciting times in biomedical research. Though the biopharmaceutical industry is in flux, prospects for a greater understanding of the disease process, and the development of new treatments, has never been brighter. Gilead Sciences’s new hepatitis C drug sofosbuvir (Sovaldi) will actually cure most patients of their infections, and replaces treatments that were both less effective and marred by serious side effect profiles. A new combination of cancer drugs extended the lives of breast cancer patients not by weeks, but by 15.7 months compared to older treatments. Next generation sequencing technologies are enabling the rapid diagnosis of both infectious and metabolic diseases. Many rare disorders, which in years past might never have been accurately diagnosed, have given up the secrets encoded in their DNA.

In the case of cancer, many different tumor types have been sequenced and their molecular defects identified. These data will point the way towards treatments that are focused on these particular biomolecules. Not all of the genetic information will direct how the patients will be treated, but the knowledge gained may enable future therapies, or spare patients from existing modalities that won’t work. A new drug was just approved for treating melanoma, the sixth one granted by the FDA since 2011 to treat this deadly disease. Advances in cellular repair therapies like CRISPR may one day make it possible to correct genetic defects in cells, allowing for the treatment of literally hundreds, if not thousands, of monogenic diseases (those caused by a mutation in only a single gene), such as Duchenne muscular dystrophy and cystic fibrosis. And stem cells are being tested in thousands of different clinical trials for a wide variety of disorders.

Here in Seattle bright rays of light are penetrating the gloomy cycles of repeated layoffs. Adaptive Biotechnologies raised $105 million in April, and Novo Nordisk is offsetting the dissolution of their Seattle inflammation group by establishing a new obesity research team in Seattle. The most brilliant arc to shine through the region lately was the launch of cancer immunotherapy company Juno Therapeutics. Founded out of technologies coming from New York’s Memorial Sloan-Kettering Cancer Center, the Fred Hutchinson Cancer Research Center, and Seattle Children’s Research Institute, the company has raised an astounding amount of capital ($310 million) in its first year. The sum reflects the enthusiasm that many venture capitalists and institutional investors have for this approach. As a bonus, Juno has been able to hire local biotech veterans from immunology-focused companies including Immunex, Dendreon, and Xcyte Therapies. More good news: Celgene has committed to establishing an “Immuno-Oncology Center of Excellence” in Seattle, although details of its plan have not been made public.

Juno, though, is not your typical biotech company. Most biotechs don’t have the luxury of raising money after their technologies have already been at least partially validated by small-scale clinical trials. Even if Juno’s treatment regimens can be successfully expanded at scale, the cost associated with them is going to be uber-expensive for payers. That, in turn, is going to attract the attention of those Big Pharma companies who need to fill patent-expiration holes in their revenue streams (which in any given year is most of them). Then we’ll be left with the million-dollar question of whether a future acquirer wants to expand its presence here, or if it’ll be more layoffs as part of “The Never Ending Consolidation Story.”

The Bigger Picture: Biomedicine Faces Challenges In Multiple Areas

The loss of biopharma jobs is a significant concern here in Seattle. However, jobs are just one of the issues facing the biomedical industrial complex. Declines in pharmaceutical research productivity and the challenge of drug affordability continue to be vexing problems with no easy solutions. Funding for government sponsored biomedical science has endured serious cuts in recent years, especially for those supported by the National Institutes of Health. It’s driving many scientists to retire or change jobs. A recent paper, “Rescuing US biomedical research from its systemic flaws,” written by some of our nation’s most prominent research scientists, points to the need for fundamental changes within this system. They declare that the status quo is unsustainable. Whenever you hear about the need for science, technology, engineering, and mathematics (STEM) jobs, keep in mind that not all of these positions are created equally. While there is a strong need for more engineers, it appears that there are not enough jobs out there to employ the current crop of biologists as well as those presently earning their PhDs in this field. I’ve given career development talks at a number of area academic institutions in the past year, and I can tell you that many of the graduate students and postdocs are very concerned about their future job prospects.

If we’re going to talk about completely remaking our biomedical enterprise in the U.S., then we should also engage in some serious conversations as to whether or not our current system for coming up with new drugs is the best that we can imagine. Maybe it’s time to think about new ways of funding biomedical science. There are some non-profit organizations that work on drug development, and this model should be given a closer look. Roger Stein and his colleagues at MIT have suggested a new model for funding drug development by financing bonds to pay for it. While I’m not an economist, I like the approach because it illustrates creative thinking and it could work out financially. For those of you who haven’t been paying attention to drug costs, paying for new medicines, especially in oncology, is becoming increasingly problematic. It’s one thing to pay a lot for a curative drug that can save your life (e.g. Gilead’s hepatitis C drug sofosbuvir, priced at $84,000 in the U.S.), but some of the most expensive drugs in oncology only extend most patients lives by a few weeks.. These high costs led cancer doctors at Sloan-Kettering to write an editorial explaining why they were not going to prescribe a new drug called ziv-aflibercept (Zaltrap): its high cost outweighed its benefits. This resistance persuaded Sanofi, the developer of the new medicine, to cut the price in half.

Are Our Efforts to Encourage Biotech Growth Competitive With Other States?

As Seattle Seahawks quarterback Russell Wilson likes to point out, if you want to achieve success, “the separation is in the preparation.” A number of other states appear to be doing a better job of investing in their biomedical futures than we are. California launched its $3 billion stem cell initiative in 2004, an enormous commitment at the time. The University of California system just announced that it’s making a $250 million investment in venture funding to back the ideas of researchers at its member institutions. Massachusetts launched a $1 billion initiative (a mix of loans, grants, and tax credits) in 2008 to boost its biotechnology industry, although it was later scaled back as a result of the financial crisis. I’m sure that supporters and detractors will argue over the exact benefits of these investments for years, but what’s not debatable is that these two states are the industry leaders in biotechnology.

They’re also not alone in promoting biotechnology. New York City launched a bioscience initiative in 2011 as a public-private partnership, and followed that up in 2013 with a $100 million investment in early-stage life science companies. It also helped recruit Seattle’s Accelerator to establish a branch in Manhattan that will fund local startups.

Here in Washington state, we’re a bit more cautious. Ten years ago a plan, Bio21, was put together to foster our biotechnology industry and build up the local biomedical infrastructure. Legislative and biomedical leaders crafted this blueprint with a detailed agenda of ambitious aims, but ultimately it did not come to fruition. Many of its component parts went down in flames before they even got off the ground. Some of its goals survived, such as the (partial) funding of nascent bioscience companies via the Life Sciences Discovery Fund. Even then, it took a 2013 veto from Gov. Jay Inslee to save even a $9 million investment in the LSDF. The money that funds this initiative doesn’t come from state taxpayers, but from the Tobacco National Settlement Agreement. Only a fraction of the money that was going to be spent on smoking cessation programs and expanding the state’s biomedical research investments actually went to its intended use. The rest was diverted into other state programs or the general fund. No matter how you slice it, our state’s funding of biomedical initiatives appears to be minimal at best.

Moving Forward: What’s Our Plan?

Charles Dickens once said, “Reflect on your present blessings, of which every man has many; not on your past misfortunes, of which all men have some.” Washington state is indeed blessed with a number of world-class biotech companies and biomedical institutions, but it has lost many of its largest biotech companies, including Immunex, ICOS, Corixa, and a branch of the Bristol-Myers Squibb Pharmaceutical Research Institute. In addition, it competes against a number of other cities that can rightfully make the same claim to top-drawer academic powerhouses. Given the nature of the biopharmaceutical business, we would benefit by having more organizations here that can hire the employees that are laid off when their companies are acquired. I’m hoping that I never see a billboard that says, “Will the last biotech worker leaving Seattle turn out the lights.” Our local venture capital infrastructure is significantly smaller than other biotech hubs, and (Juno aside) out-of-state investors aren’t rushing to invest their money here.

Having said that, this isn’t a time for hand wringing: it’s a time for rolling up sleeves and coming up with some creative ideas to see if we can reverse the trends I’ve outlined above. We need to have a regional meeting not to share our collective angst, but to solicit the best ideas to craft an actionable plan that is more than slogans and dreams. As French author Antoine de Saint Exupery opined, “A goal without a plan is just a wish.”

The South Lake Union area is sometimes referred to as Seattle’s biotech hub. Clustered there are Seattle BioMed, the Institute for Systems Biology, branches of Seattle Children’s Hospital and the University of Washington, PATH, and of course, the Fred Hutchinson Cancer Research Center. Jobs at these institutions are an important (and very large) component of our local biomedical ecosystem, and most of them are engaged in work that can be characterized as biotechnology. However, these are non-profit biomedical research institutions. They should not be mistaken for biotechnology companies because they operate under different economic rules, their central focus is not on the commercialization of their science, and they will not be acquired by a bigger institution. There are some biotechs located in the area, but they occupy only a small fraction of the total square footage as well as biomedical jobs. Given Amazon’s growing presence in the area, I worry that small biotechs are going to get priced out of South Lake Union.

Despite its current problems, Big Pharma is an irresistible economic force, with sales and profit margins that most companies can only dream of. They are richer than Croesus, seemingly immune to even multi-billion dollar screw-ups (e.g. Bristol-Myer Squibb’s purchase and subsequent write off of much of its $2.5 billion investment in Inhibitex). The smaller biotechs that they interact with are easily movable objects. Knowing these things can help us decide what incentives and penalties might be used to craft a coherent policy that might encourage the growth of biotech in the region.

The current economic climate in our state appears to be worse than it was back in 2004, with the McCleary decision (a state Supreme Court requirement for the state to adequately fund basic education) weighing heavily on state legislators. It would be wonderful if one of our area billionaires decided to invest even more of their personal fortunes in our local bioscience institutions. Money from the Bill and Melinda Gates Foundation already supports projects at PATH and Seattle BioMed, and Paul Allen has done the area a tremendous favor by creating the Allen Institute for Brain Science. It’s also been suggested that they might want to bankroll a new technology university in the state, and probably a thousand other causes as well. I don’t think we can wait around for the super-rich to start writing big checks. We need to craft a plan without counting on manna from heaven.

We need to ask ourselves: is the status quo the best we can do? Should we simply accept our minor league status, skip the planning meetings and legislative info sessions, and stop gnashing our collective teeth? If we truly aspire to compete with the best, then we need to enable our biomedical enterprise to help drive the growth of the industry and contribute to the health of the people of our state, all fifty states, and beyond. Can we figure out a way to incentivize acquirers of local biotechs to keep the companies going in their present locations, and agree to retain a majority of the employees at the time of acquisition? Can we attract new contract research organizations (a big growth area in recent years) to Seattle? Baxter International just announced that it’s leasing a 200,000 square foot facility in Boston’s Kendall Square to house its new Baxalta R&D spinoff. Is it possible to get other companies to relocate to Washington state? What’s the best way to play to our strengths in immunology, cancer research, genomics, and world health? Or should we focus on other areas to add diversity to our current successes?

Bringing about effective change is not going to be easy, especially with our difficult economic situation. The McCleary decision has us competing with one arm tied behind our backs, but that’s not a reason to give up. Maybe I’m the only one worried about this issue. But if you’re as concerned as I am, start up a dialog with your colleagues and coworkers. Voice your concerns to local officials and to your state legislators. Share your thoughts and ideas in the comments section below. Maybe if we all start rowing together in the same direction, we can get good things to happen. Change won’t come easily. As George Bernard Shaw once put it, “Progress is impossible without change, and those who cannot change their minds cannot change anything.”