I was intrigued by the concept of an “innovation supply chain” for biotech raised in last week’s Xconomy discussion with Noubar Afeyan of Flagship Ventures. The basic idea is that if there’s agreement about certain experiments, results, and value with a pharma company, then a biotech company can focus on delivering those results, the pharma company would have greater assurance of a “supply” of new drug development candidates, and investors would be more assured that they would be rewarded for their investment.
I found myself arguing with my computer screen as I read it.
To be fair, there’s a broad spectrum of what constitutes a biotech company. Some companies are working on valuable but incremental improvements while others are attempting to develop broad new biologies or modalities. Noubar himself helps develop companies across that spectrum (e.g., Moderna Therapeutics and Syros Pharmaceuticals are two recent examples of Flagship portfolio companies pursuing very innovative science). (Disclosure: I’ve known Noubar a long time, and he was a founder, investor, and director of Adnexus Therapeutics, where I was head of business development. I think he is deeply creative and sees further down the road than most).
These days there are lots of initiatives around single-asset entities, and you could argue that each of these fits into the supply chain concept that Noubar put forward:
—Arteaus Therapeutics and Annovation BioPharma from Atlas Venture Development.
—CMEA’s Velocity Pharmaceutical Development (whose tagline is “we build drugs, not companies”)
—NEA’s & Pfizer’s Cydan, which calls itself an “accelerator” and focuses on drugs for rare diseases.
—The recent Avalon Ventures / GSK initiative, which hews pretty closely to a supply chain concept.
But if these initiatives are to deliver truly important new medicines, they need to bring more to the table than just an ability to execute on drug development plans outside of pharma companies’ profit-and-loss statements.
Aligning Interests? Or teaching to the test?
One of the concepts in the supply chain model described by Xconomy is that “innovators should be working closely with the acquirers from the early days, getting regular feedback…[this can] force the startup to run the key experiments needed to prove the value of their idea, rather than simply guessing what the pharma companies want to see.”
Yes and no. Take it too far, and it’s like standardized testing in education and the concern that teachers “teach to the test.”
This isn’t unique to an acquisition scenario; every business development meeting is an opportunity to get input. I think this is actually an advantage that small companies have—because we typically need to cultivate potential future partners and investors, we constantly put our data and plans up for external scrutiny. That’s a lot of opportunities to get feedback and new ideas.
But you have to sort through that feedback carefully. Some
