Biotech is not a new science. Marie Curie’s Nobel Prize-winning work with radium at the cusp of the 20th century was biotech, as was Alexander Fleming’s discovery of penicillin in 1928. But turning radium into medical X-rays and penicillin into a lifesaving antibiotic was a far simpler process a century ago, even taking into consideration the primitive tools those scientists had at their disposal.
Across the next two issues of the MIT Sloan Fellows Newsletter, we will look at two aspects of biotech. In this issue, we examine the complexities of the contemporary biotech frontier, and we get some expert advice on how to navigate those complexities. In the next issue, we’ll look at the healthcare side of biotech and the real impact that biotech innovations are having on the practice of healthcare. Stay tuned.
For decades, Kendall Square was a sprawling jungle of industrial factories and parking lots. Today it is an innovation powerhouse fueled by the talent and resources of nearby universities and world-class hospitals. In 2010, the Boston Consulting Group labeled it the most scientifically and economically innovative square mile in the world.
Kendall began its rise in the 1980s with the establishment of Biogen’s first U.S. facility. It was a good time to open up shop, says Institute Professor Phillip Sharp, who co-founded Biogen (now Biogen Idec) in Geneva in 1978. “Being early gave us access to resources and access to outstanding people that helped us lead.”
While Sharp says Kendall was, at the time, nothing more than “a vacant lot,” the co-founders saw it as an advantageous location: It was near top molecular biologists at MIT and Harvard University and close to a business-savvy community in Boston. “It was much easier to recruit outstanding scientists with Biogen located on the edge of MIT,” Sharp says.
Additionally, Cambridge had been the first city in the world, in 1976, to establish a local ordinance regulating research with recombinant DNA; in the early 1980s, Biogen’s novel research involved isolating, synthesizing, and sequencing genes with therapeutic properties to treat diseases. The city and the company reached an agreement on how to practice genetic research, easing Biogen’s way in earning licensure and municipal support for research.
“Having a set of rules to play by took the uncertainty out of the equation,” Sharp says. “This is a classic example of how fundamental breakthrough science at universities sparks innovation in a new economic development in society.”
Over the decades, Sharp watched numerous biotech firms and other businesses rise around Biogen, bringing a surge of talent and innovation to Kendall Square. “As more biotech has developed in Kendall,” Sharp says, “it means there has been more expertise, more sophisticated people. A big community of excellent people where there’s an openness will stimulate everyone to get better, and that’s what this community is about.”
Indeed, Kendall Square’s reputation for innovation has drawn multinational firms such as Novartis, Pfizer, and Genzyme. Researchers at MIT Sloan found in 2009 that life-sciences companies in Kendall—a single neighborhood—accounted for two-thirds of all research and development expenditures by Massachusetts biotech firms. In 2002, Sharp cofounded another startup in Kendall Square: Alnylam Pharmaceuticals, which specializes in RNA interference, a means of controlling active genes.
“The innovation in life science has accelerated and continues to accelerate. New things are appearing almost weekly,” Sharp says. “And to keep abreast of that innovation, companies want to be close to where it’s being generated, and that’s in large part in academic labs, in hospitals, in medical schools, [and] Boston has a collection of the premier ones in the country.”
After three decades in Kendall Square, having tapped a steady stream of local talent, Biogen Idec is a global leader in synthesizing therapeutics to treat diseases including cancer and multiple sclerosis. As of 2012, the company has $5.5 billion in annual revenue and employs roughly 5,000 people worldwide. It has also opened several additional facilities in Kendall Square.
Excerpted from the article Birthplace of Biotech by Rob Matheson, MIT News Office. Read the full article.
The high tech marketplace may be extraordinarily complex and highly changeable, but biotech multiplies the uncertainty factor by light years. As political, economic, and technological forces morph, so does the biotech marketplace. MIT Sloan faculty are charting its volatile course and helping to shape that course.
In financial engineering, for example. Drug development can take a decade and close to a billion dollars, so funders aren’t exactly queuing up to help commercialize innovations. MIT Sloan Professor Andrew Lo and his colleagues have devised a novel way of financing drug development through “securitized debt.” In an article in Nature Biotechnology, Lo and his coauthors Jose-Maria Fernandez, SF ’10, and Roger M. Stein suggest that a large megafund comprising long-term bonds issued by leading drug companies could help investors justify funding of risky biomedical research.
Traditionally, biotech startups finance research through venture capital funds, then eventually go public and issue stock to fund the next stages of development. Lo and his coauthors note that the biotech industry spent $127 billion on clinical development, but only $6-7 billion on efforts to transform lab research into drugs that enter clinical trials. The securitized debt model, however, would help mitigate risk for all players. Using debt financing on a large scale would bring in more funding, enabling companies to support the kind of research projects they would ordinarily view as too risky.
Jonathan Fleming, Senior Lecturer at the Trust Center for MIT Entrepreneurship underscores Lo’s point that the biotech marketplace must find new financing models. He says that for the most part, traditional models for funding biotechnology startups fail to reward founders and early stage investors owing to the increasing capital requirements of clinical development and regulatory approval.
Fleming cites dramatic changes in the policies and procedures governing FDA drug approval as one major factor. “The biotech world used to be driven by scientific discovery,” he says. “Today, it is driven by problem solving for specific groups of patients.” A Congressional mandate now requires companies to prove that their drug is better than an existing drug. “Basically, you have to prove superiority instead of non-inferiority to a current therapy.”
Consequently, Fleming says, the most successful biotech projects today are focused on rare diseases or niche treatments for common diseases—drugs that have a high probability of success with a small number of patients that have been prospectively identified with some form of diagnostic test. For example, scientists who seek to develop a treatment for all breast cancers are not as likely to succeed as those trying to develop a product focused on a specific category of breast cancer patient for whom no adequate therapies exist. The scientific team that can prove it has found a successful treatment for triple negative breast cancer patients, a group for which no effective drugs yet exist, has a much more promising biotech product than a product aimed at all breast cancers.
Fleming, who is a general partner at Oxford Bioscience Partners, an international venture capital firm specializing in biotech, genetics, and medical device investments, has deep experience with this evolving market. The new paradigm for drug discovery and development driven by the FDA and the reimbursement system offers challenges and opportunities for biotech entrepreneurs. “People who are smart about their strategy and about the market will succeed,” he adds. “Those who are stuck in the old way of doing things will not.”
MIT Sloan Associate Professor Pierre Azoulay agrees, pointing to the numbers—for every biotech firm that succeeds, another 50 fail. “Unlike the Internet industry, where all you need is to take a great new idea to the customers who want it, a great life-sciences discovery is no guarantee that the innovation will make it past the funding and regulatory gauntlets and into the marketplace.” He adds, “Biotech is continually looking enviously at the scrappy, high risk dotcoms for inspiration, not realizing that it is a fundamentally different business.”
Azoulay likens drug development, instead, to bringing a new jumbo jet to the runway. “The two processes are similar. It takes a decade and billions of dollars to get each product to market. All the science, the testing, the materials have to be meticulous to gain the respect of investors and regulators.” However, for many biotech entrepreneurs, Azoulay notes, years of crossing t’s and dotting i’s is not as exciting as the original scientific impulse and ultimately wears down many a budding pioneer. As does the sobering fact that the jumbo jet has a better chance of making it to market than the medical treatment. A recent article in Forbes noted that 95% of the experimental medicines studied in humans fail to be both effective and safe.
One hedge against failure, Azoulay points out, is collaboration. While many a biotech entrepreneur dreams of independently growing a startup into a Biogen or a Novartis, the costs and complexities in today’s marketplace place the odds against them. Azoulay says that biotech entrepreneurs must build strong partnerships across the industry, especially with the very biotech giants they aspire to compete with. Those giants have the sophisticated machinery in place—technological as well as regulatory—to give a drug discovery its best chance for survival.”
In an effort to improve the drug-development climate, MIT Sloan faculty Deborah Ancona and Retsef Levi have joined a process-design laboratory called NEWDIGS (New Drug Development ParaDIGms) at the MIT Center for Biomedical Innovation. NEWDIGS focuses on transforming the global pharma ecosystem so that it delivers new, better, affordable drugs to the right patients faster. A “think and do tank,” NEWDIGS is undertaking reengineering projects with input from industry regulators around the world as well as from providers, patients, and academic researchers from MIT, Harvard, and other leading institutions. The underlying premise: major complex challenges in healthcare cannot be solved by a single organization or market sector. Read more on MITCBI and NEWDIGS.
Over the last generation, many a biotech pioneer—or aspiring pioneer—has been drawn to the MIT Sloan Fellows Program by the energy of reinvention and discovery happening at the Institute and the burgeoning biotech epicenter next door in Kendall Square. Aside from the life-sciences innovations they are generating, what is most interesting about many biotech-focused alumni and their companies is that each of them is reinventing the biotech model itself—and each in a very different way.
Jeff Behrens, SF ’07
President & CEO, Sialix
Biotech spinouts from universities like MIT and Cal Tech are common. The usual model is to spin an academic laboratory innovation into an enterprise that either swims or sinks under the pressures of a marketplace looking to back sure bets. Often, a promising spinout is bought up by big pharma. Sialix, a spinout from the University of California San Diego, has developed a slightly counter-culture model.
“We are an angel-funded company and semi-virtual,” explains President and CEO Jeff Behrens, SF ’07, who was hired by Sialix’ initial investor Sundar Subramaniam, SF ’06. “We manage our funding strategically, outsourcing a lot of our work so that we have a very low burn rate.” Sialix is entirely focused on innovations in glycobiology, but within that niche, their product line is boldly diversified. The company is developing ovarian cancer therapies against glycan structures present on the surface of tumor cells, antibody kits for researchers to measure N-glycolylneuraminic acid, as well as a nutritional product to make eating red meat safer from a cardiac health standpoint.
Behrens went to the MIT Sloan Fellows Program and the partner MIT Biomedical Enterprise Program (no longer offered) with the expressed purpose of changing course from high-tech entrepreneurship to biomedical entrepreneurship. He says that there is something about biotech that draws entrepreneurs and funders against the odds. “I think it’s a combination of the people and the science. Working with such a high caliber group of scientists is a thrilling experience. So is knowing that what we’re generating is revolutionary and could make a real difference to humanity. A game app just doesn’t carry the same level of satisfaction.”
Kailash Swarna, SF ’12
Senior Director, Takeda
“Takeda has been an international company for a long time, but only recently could it be categorized as a truly global enterprise. In the old days, a company like Takeda would bring its agenda everywhere it went in the world.” Today, he says, with a market presence in 70+ regions around the world, Takeda is reaching out into the communities in which it does business to understand the needs of that particular population. “We feel a responsibility to the world.” Swarna notes that Cambridge-based Millennium, a Takeda acquisition, is part of the WIN Consortium (Worldwide Innovative Network), a global group of leading academic, industry, and patient advocacy organizations working to make personalized cancer care a reality for patients worldwide.
“There has never been a better time to be in biotech,” Swarna observes. “We’re all working toward the next frontier for intractable cancers, and there is a heady feeling that we have the opportunity in the next decade to make real strides.”
Monique Mansoura, SF ’12
Director, Policy and Development
Medical Countermeasures Global Program Team
at Novartis Vaccines and Diagnostics
Novartis, a leading multinational healthcare company with a diversified portfolio that includes a vaccines and diagnostics division with headquarters near Kendall Square, is focused on collaborative global solutions. Monique Mansoura, SF ’12, drives strategy and business development for the Medical Countermeasures (MCM) franchise, a public-private partnership between Novartis and the U.S. government focused on pandemic influenza preparedness and response.
Before joining Novartis, Mansoura worked for the U.S. Department of Health & Human Services where, after the 9/11 and anthrax attacks, she and her team designed, launched, and built the multibillion-dollar MCM program for the U.S. government. Her group spearheaded national health security strategy and policy for programs that developed drug, vaccines, and diagnostics to address global health threats, including radiation exposure from events such as the Fukushima nuclear accident or from the use of chemical weapons in Syria. Since joining Novartis, her MCM team there has rapidly developed and is now testing a vaccine for H7N9 influenza, the latest potential pandemic threat following the outbreak in China last spring. Through innovative technologies and new domestic manufacturing capacity, Novartis has become a premier partner of the federal government and will be a primary supplier of vaccines for pandemic flu in the event of a crisis, as it was during the 2009 H1N1 pandemic.
Mansoura first encountered the complex ins and outs of large-scale, multinational, technology-driven biomedical and biotech challenges while working with Francis Collins on the Human Genome Project from 1996-2001. She notes that opportunities have grown dramatically since then—in part as a result of the information, tools, and technologies derived from and driven by the Human Genome Project. “It’s an extraordinarily challenging time for the biopharma industry and healthcare ecosystem. The Cambridge/Boston area is arguably the center of the universe for investigating these challenges given the robust, multi-stakeholder environment, quest for innovation, and system-level thinking. Science and technology alone will not provide solutions.”
Jessica Harrington, MD, SF ’07
Director, Broadview Ventures
Harrington, who has spent her career in both clinical and business environments within the healthcare system, is an MD who operated a family practice for many years. She is one of five employees at Broadview Ventures, which she says has a lean and mean infrastructure so that funds can be funneled toward medical innovations. Although only in business for five years, Broadview Ventures has already funded some medical breakthroughs—including the very first mitral-valve replacement that can be delivered over a catheter, avoiding open-heart surgery. Harrington says this success has attracted $32 million in outside funding for the valve company. She adds that the means can be just as important as the end. “Even if the medical innovation doesn’t make it to market, you can never go wrong funding good science. Researchers learn so much during the exploratory process.”
We’re already at work on the next MIT Sloan Fellows Program Newsletter. Please drop us a line at email@example.com if you have ideas about themes and news items for future issues.
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