collaboration in New York—rather, people wanted to protect their turf, and didn’t want to team with other institutions, or “sully…academic purity” by teaming with industry. So what’s changed? First, Tessier-Lavigne said there was a “cultural shift.” New leaders like Harold Varmus (previous president of the Memorial Sloan-Kettering Cancer Center) and Paul Nurse (previously of Rockefeller) came in. Science became more collaborative as problems became more complex. Boards of respective institutions started pushing to work together. And animosity towards industry is “gone, there’s not even a residue of resistance,” he says.
Now, all of those research institutions—each individually smaller than the massive ones like Stanford University or UCSF, for instance—are joining together to maximize their ability to translate research discoveries. Partly, of course, because it’s financially necessary due to the federal squeeze in grant funding.
“We’re all smaller, but collectively in a sense that drives us together, because we can’t achieve that economy of scale one institution at a time,” Tessier-Lavigne said. So in a sense, that weakness becomes a strength once we actually got around to collaborate.”
4) The keys to accelerating NY biotech? Cheap lab space, and financial incentives. Despite the research power, financial might, presence of local pharmaceutical powerhouses, and even startup incubators, New York is still needs more to make it all come together and create a sustainable biotech ecosystem. Tessier-Lavigne noted that affordable lab space and financial incentives for VC firms to invest in New York companies are critical. Incubators are sprouting up already to help with the former problem and more such efforts are needed. But the financial incentives are just as important. That’s the idea behind the NYCEDC’s fund. The agency is looking for a VC firm to match a $50 million commitment it’s put up with the help of Celgene, Eli Lilly, and GE Ventures, to form life science companies in New York. That firm will get exclusive access to the NYCEDC’s $50 million cash pool.
“Even if we have the lab space, it’s still easier to start a company in a place like Boston or San Francisco because of the human capital,” Tessier-Lavigne said. “In New York, because the industry isn’t as mature, to start a company it often means importing the talent, which is just harder than poaching from the local community. The way you get investors to not take our ideas and start companies elsewhere is to provide financial incentives.”
5) Sarissa’s got cash, but it’s waiting to strike. The biotech bull market is charging. The IPO window is wide open, and valuations are high. This “paradoxically” makes it harder to invest, because it’s harder to turn that cash into a big return, according to Alex Denner. Because of this, his firm, Sarissa, hasn’t invested a “good part” of its more than $500 million fund yet. It’s only a matter of time though.
“Biotech ebbs and flows. I hope that [the success] continues in this sector, but it probably won’t,” Denner says. “There’ll be some disappointments that take valuations down I would guess.”
6) The attitude towards activist investing is changing. Denner says that years ago, a big part of the fight to get board representation would be to convince big institutional shareholders to vote in his favor. Now, he’ll get calls from those shareholders questioning management. Companies themselves, he says, are also less resistant to activism, despite the management turnover it might cause. Boards are more likely now, he says, to overrule a CEO reluctant to make a deal, seeing instead the value that activism can theoretically create. Denner, the one-time Carl Icahn lieutenant well familiar with boardroom agitation, surmises this will lead to
