Tech Transfer Clogging the Pipes of Biotech Innovation

It's no secret that the drug pipeline in the world of Big Pharma is drying up. The new pharmaceutical model has been to slash research and development and to acquire biotech companies and/or patents. As a result, pharmaceutical companies are on the hunt to buy biotech companies with promising drugs in the pipeline. More specifically, they are on the hunt for biotech companies with promising drugs in the pipeline that are successfully nearing the end of Phase II trials.

Whether this new model will succeed remains to be seen. But one thing is for sure: If the number of new drugs decline due to lower commercialization rates of new technology, than the biotech industry in general will be in serious trouble. At best, the industry as a whole will be underperforming.

What could cause a lower decline in commercialization rates of new technology?  The increasingly lackadaisical nature of  technology transfer departments.

As Gerald Barnett noted in a piece he wrote titled Bad Science and University Transfer, tech transfer departments need to do a better job verifying and marketing new technology. Unfortunately, what tech transfer departments really need is what they don't have: Entrepreneurial drive. That only comes from people with a vested interest in commercial success.  Expecting a university bureaucracy, which is the epitome of a  "play it safe" culture, to function in an entrepreneurial capacity, is ridiculous.

What's needed is to have the scientists of discovery take a lead role. If they are not interested in the job, than the tech transfer should go out of the way to find someone who can. Letting life saving discoveries sit on the shelf hurts biotech, as well as humanity. Tech transfer departments across this country can and should do better.

How Algae Fuel Can Replace Oil

The biggest problem encountered by researchers looking to make algae fuel a viable replacement of oil is scale. Scientist and entreprenuer Craig Venter is one of a growing number of people who doubt that algae alone can make to amount of fuel neccessary to replace oil (for more details, see Katie Fehrenbachers article on Gigaom).

Venter's solution to the problem is elegant, if not dangerous. In short, Venter sees a designer organism that concentrates soley on producing algae fuel as the most practical method of solving the problem of scale. Since his team was the first to create a synthetic bacteria cell, making this idea a reality is not beyond the realm of possibility.

Creating a synthetic organism designed for the sole purpose of producing oil is not without danger. Introducing this new organism into the environement could wreak havok on the ecosystem. Still, Venter is confident that safeguards could be introduced into the genome that would prevent this from occurring.

Reverse Mergers Provide Another Option For Biotech Financing

With the number of IPO's declining over the past few years, some biotech company founders are opting for reverse mergers as an alternative way to help finance their company.

Jennifer Boggs of BioWorld recently wrote about Couger Biotechnology, which engineered one of the most successful reverse mergers in years.  Founder Alan Auerback opted for a special purpose acquisition company (SPAC).  Auerback stated that the use of a shell company allowed shareholders of Cougar hold 100 percent of the combined firm and avoided the "legacy investors."

Reverse mergers are often used to finance working capital needs. The downside is that they are expensive. In addition, there's no ramp up.  "There's no "coming out party, like with an IPO, with underwriters helping to build enthusiasm for the newly listed stock," Auerbach said. "You kind of have to build momentum on your own."  At this point, having a well-planned marketing strategy is essential for success.

Who Leads Biotechnology?

Who leads biotechnology?
This question was asked in a recent article I read. The author, reflecting on the passing of Steve Jobs, had a difficult time coming up with names that were readily recognizable in the biotech field. Her conclusion was that many biotechnology companies tend to be led by faceless venture capitalists and finance people. In addition, the scientists responsible for the technology are generally not well known outside their field of study.

While the question may seem trivial on the surface, it's important from the standpoint that the industry doesn't really have a spokesman at a time when the industry could use one. Issues of intellectual property, government funding, and a stable economic framework are critical to the foundation of biotech. Having a well known and well respected individual talk about the needs of biotech while relating how the industry impacts the public would be a boon.

I invite you to share your thoughts on the matter.

Biotech Buzzkill - NIH Grant Funding Dips To Historic Lows

News from The Scientist about NIH grant approval hitting historic lows wasn't exactly a surprise, but it was certainly noteworthy. Here's a sample from the piece:

"According to the new estimate put out by the NIH’s Office of Extramural Research (OER), the fiscal year that ended on September 30 saw the funding of just 17.4 percent of research grant applications... it’s a significant drop from the 32 percent of grants the agency was funding around the turn of the millennium, and the first time in NIH history that the success rate has dipped below 20 percent."

The big question is, How long will this continue? Investing in research and innovation is key to putting the United States back on the road to a vibrant economy. Unfortunately, the national mood regarding government investing in technology appears to have soured for the moment. If this trend continues, scientists and biotech start-ups may have to investigate funding methods that are as novel as the technologies they are pioneering.

How The Biotech Industry Can Get its Mojo Back

Like other industries, biotech has taken its share of hits over the last few years. Unlike other industries, however, some of the problems that afflict the biotech industry are structural.  While macroeconomics play a large role in the health of biotech, there are things that the industry can do to improve its standing.  Here are some suggestions:

1)      Embrace the Overhaul of the US Patent System – The switch from a “first to invent system” to a “first to file” system will speed up patent reviews, not to mention costly litigation.

2)      Allow Scientists Responsible for Discovery to Have More Say In Commercialization – This is a topic I addressed recently on this blog, but it needs to be restated.  Currently, technology transfer departments have a big say in how technology discovered in their institution is commercialized. Unfortunately, many administrators within these departments often have goals that may run counter to the goals of discovering scientists. Plus, many administrators lack the business skill set to maximize commercial viability.

3)      FDA Reform – Products should be tested for safety first and foremost. Testing for efficacy, however, slows the process down considerably and opens up too many gray areas, leading to delaying products coming to market and driving up legal costs. Let the patients and medical professional decide what products they should use to treat a particular condition.

4)      Attract More Entrepreneurs and Skilled Business People to the Industry – Many biotech companies are run by people who are primarily scientists, followed by attorneys and financial accountants. Of course, this makes sense – the scientific, legal, and financial complexities of the field demand it.  The downside is that too many biotech companies lack skilled business professionals to help leverage their technologies more effectively. Steve Jobs is an example of someone who wasn’t trained as an engineer or designer, but he was a marketing genius in the truest sense. His vision and entreprenuerial zeal drove technological breakthroughs. Biotechs led by entrepreneurs can move mountains.

These are just a few examples of how the industry can tweak its way of doing things, allowing for more products making it to market.  If you have any comments, let me know!

Role of Marketing Increases As Life Science VC Sits, Goes Overseas

If you work in the life sciences, today’s headlines weren’t very comforting.  BioWorld reported that third quarter investing plunged by 60%. FierceBiotech reported that one key biotech VC firm has abandoned attempts to assemble a $250million fund.  Ellen Clark of Clark Executive Search wrote about biotech ventures relocating overseas due to cheaper costs and risky and lengthy FDA approval.

News of rough times for the biotech industry coincides with a report published by the Institute of International Research, which stated that marketing will be the most important area of expertise for next generation leaders.  The CEO’s in the survey placed marketing on top, followed by operations and financial expertise.

When you consider that marketers are responsible for the 4 P’s (product development, pricing, placement, and promotion), the survey is not surprising. Marketers play a key role in the Biotech business. Few disciplines understand the relationship between R&D, finance and operations like marketing.  In addition, having a solid marketing plan is vital to securing financing.

Given the challenges of today’s economic environment, having a professional marketing presence is no longer a luxury - it's a necessity. The future belongs to biotech companies that embrace this fact.