Even when our success stories were purchased (Immunex by Amgen, Icos by Eli Lilly) layoffs occurred. When our local companies get bought out, the jobs are either trimmed down or, most of the time, they are eliminated entirely, like with Corixa, Celltech. When layoffs occur via takeover or failure, there aren’t enough new companies around to absorb those jobs – so these people leave the market all together. And what is the fate of newly-formed Fate Therapeutics? Apparently, it lies in San Diego. Even when I was raising the Series B for Spaltudaq, potential investors suggested that we move our operations to the Bay Area to effectively support our business plan. If Seattle wants to be in the big leagues, it cannot sustain itself in that direction by being a farm team for the big leagues. We seem to have adopted the same business model of our local professional sports teams, acting like a farm team by developing talent and shipping it off to the highest bidder. It was great watching my favorite Mariners playing in the World Series…only they were wearing Red Sox jerseys among others (thanks Boston).
On the upside, Accelerator-formed companies are beginning to make a dent in the 500+ layoffs/job losses since 2002 as the first three graduates have almost created 100 jobs. But despite the copycats, there really is only ONE Accelerator. Carl Weissman has put together the best syndicate of investors for getting seed-stage ideas into the next stage of funding. This is an extremely heroic task given the risk-averse attitude investors of today. In order to achieve this feat, the selection process was stringent and the founders were not only on a shorter leash, but a shock collar was added (thanks to our predecessor companies of the ’80s and ’90s). And given the state of the market in the last five years—ie. virtually no funding for seed stage ideas nationally—the money was expensive and served as a sign that the days of old where the scientific founders controlled their destiny were long gone. Despite all of the pressures, Accelerator is a success. But given the rate of Accelerator investments in new companies, the market-induced limited bandwidth of these new companies once they graduate, and an enormous amount of clinical targets that people are pursuing with antiquated technology; it is obvious that we either need more Accelerators or we need another mechanism of de-risking seed stage ideas/clinical targets where they are fit for Accelerator or other investment models. If there is a real desire to make Seattle a biotech hub that sustains itself, perhaps there’s a way to create a model that patiently supports growth in jobs, de-risks ideas for the investors, and caters to the pioneering spirit of the scientific founders.
A solution: Change the model
Markets are fluid beasts and they change and even cycle, but currently the demand for new or better therapeutics remains high. Antibody companies continue to be purchased for their current lot of validated or potential therapeutics, and there continues to be an unfilled void in discovery and how we do it. With this in mind, waiting for a market-induced change is not the answer.
But what if there was a way that you could create or discover high-value, billion-dollar therapeutic antibodies without having to raise expensive venture capital to do this? This would give you immunity to the pitfalls of the current model discussed above and would also begin to create an environment where the passionate scientific founders, the true believers, can pursue their ideas to exhaust all of its applications for creating therapeutic value. Scientists aren’t always the greatest businessmen, but if you’ve been in this line of work over the last 15 years and you can read, you’d have to be brain dead to not know how to create value.
And what if you could develop a discovery approach that was so efficient, rapid and cheap to run that you could immediately generate revenue by meeting the demands of the day by big pharma and others – and at the same time create your own internal value? This would fill the void created by the forces discussed and would begin the creation of a “contract discovery” role for pharma that are currently purchasing whole companies just to obtain therapeutic leads. What if the antibody aimed at CCR4 that Amgen just purchased for $520M including milestones and royalties could be purchased for $10M with a ‘stone here and there and no royalties? This could never happen with today’s directors and management, but it can happen if you lower the cost and time to obtain such validated antibodies.
And what if your technology was capable of rapidly “de-risking” targets or therapeutics to the degree that they would either create Accelerator-funded companies or would create new spin-off opportunities where founders have the opportunity to raise venture capital with pre-clinical proof-of-concept data in hand? Depending on the level of proof of concept, the latter empowers the founder, because the intrinsic value is dramatically increased. Given the unlimited number of targets, several lead antibodies or suites of antibodies could be spun off to form multiple companies for founders who wish to develop these. This would create an enormous amount of jobs since these antibodies would fit within the comfort zone of the current conservative investment models by VC’s for product development.
And what if you had the means of turning back the clock to the days of 1976 where two guys in a leaky warehouse in South San Francisco had the courage to basically start the industry that most of us love so well? What if you didn’t need the brass fittings and marble counter tops and expensive art work to add to your burn rate? I love Alexandria lab spaces as much as anyone, but I’ll look to re-unite with my old landlords after I make my first $10M deal (after taxes). And what if you could get lab space and equipment at 1976 pricing using unconventional means such as Ebay and Craigslist?
