We could have called it the “New Biotech Business Model Expo.” Xconomy’s forum—How to Build a Life Sciences Company—attracted venture capitalists and entrepreneurs from around the Boston area (and a few from across the country) to the Novartis Institutes for Biomedical Research in Cambridge on Tuesday morning to showcase the strategies they’ve used to form and fund startups in today’s challenging economic climate. Then a packed house of life sciences executives (and a few of us media types) listened to two living legends in the business, Bob Langer, institute professor at MIT, and Terry McGuire, managing general partner at Polaris Venture Partners, discuss how they have collaborated to launch 14-odd life sciences startups.
The biotech business itself is a startup relative to more established industries, and VCs and life sciences executives are still experimenting with strategies to make early-stage companies successful. It’s too early to tell whether, say, biotech startup Fate Therapeutics has improved its chances to bring a drug to market by uniting authorities in adult stem cell biology from around the country to serve as scientific founders and advisors. And the most proven business scheme among those presented—essentially, to “back science discovered in Langer’s lab at MIT”—may be difficult to replicate.
Many of the business models explored at the Xconomy Forum are likely relevant to other industries such as clean technology and semiconductors, both of which, like life sciences, depend on innovative technologies and funding strategies to prosper. For the benefit of all our readers, regardless of their industry focus, we thought it would be valuable to compile a list the strategies presented at the forum:
The Ensemble Scientific Cast Model:
For sure, dealmakers typically seek out the finest of advisors and executives to lead their young companies. However, Seattle-based Arch Venture Partners and Polaris, of Waltham, MA, took this approach to another level in forming Fate, a startup focused on the development of drugs to control the destiny of cells to treat diseases.
Fate co-founders Amir Nashat, a general partner at Polaris, and Alex Rives, an associate at Arch, presented their case at the Xconomy Forum for bringing together an ensemble cast of adult stem cell authorities—Philip Beachy, a professor of biology at Stanford University; Sheng Ding, an associate professor of chemistry and cell biology at Scripps Research Institute; Randall Moon, a professor of pharmacology at the University of Washington School of Medicine; David Scadden, a professor of medicine at Harvard University; and Leonard Zon, a professor of pediatric medicine at Harvard Medical School—to contribute their scientific discoveries and expertise to the startup. (Bob called this band of stem cell leaders “a scientific dream team” in this April story about Fate.) “We actually forced them to string their science together—that’s very important,” Nashat told the crowd, adding that the task was made easier because some of the scientific founders of Fate already had research collaborations with each other before the company launched last year.
The Nobel Laureate Model:
It never hurts to have a founder with a Nobel Prize for the area of research on which their company is focused. But it’s a dream when the Prize is awarded while you’re on the road pitching for funding. Tod Woolf, CEO of RXi Pharmaceuticals (NASDAQ:[[ticker:RXII]]), a developer of RNA-interference (RNAi) drugs designed to switch off genes linked to diseases, told the forum that the company was in the midst of its first fundraising effort in 2006 when co-founder and University of Massachusetts Professor Craig Mello learned that he would share a Nobel Prize in medicine with Stanford professor Andrew Fire for their discovery of RNAi. “This is a very good way to start a biotech company,” Woolf quipped.
The Big Pharma Checkbook Model:
Biotech firms practice this business scheme when founders manage to induce major pharmaceutical firms to commit funds at the inception of their startup to support the development of a broad array of platform technologies, which will later be spun out into individual startups. Sound farfetched? David Steinberg, a senior principal of PureTech Ventures in Boston, would likely tell you it’s not so. Steinberg, the first presenter at the forum, serves as CEO of Enlight Biosciences, of Boston, which is pioneering the Big Pharma Checkbook Model.
Enlight debuted this summer with funding commitments of $39 million from drug giants Eli Lilly, Merck, and Pfizer. Why would Big Pharmas open the checkbook for such a venture? All the projects pursued by Enlight involve “pre-competitive” platform technologies that could improve efficiency for all three Pharmas but don’t give a special edge to any—and which may otherwise go undeveloped due to gaps in financing available for nascent technologies, Steinberg explained. (For more on Enlight, here’s Luke’s recent post about the startup.)
The David (or Five Davids) Model:
Basically, this business model is a variation of the oft-practiced,
