It was an inspiring afternoon yesterday at Xconomy’s latest event, “Pharma’s Bet on Boston Innovation,” in Cambridge, MA. Local industry pioneers such as Millennium CEO Deborah Dunsire and Sirtris CEO Christoph Westphal talked about how game-changing technologies and sound business strategies have attracted big pharmaceutical outfits to invest in their respective companies.
Our speakers also offered insightful perspectives from within their organizations, including AstraZeneca, GlaxoSmithKline, Merck & Co., Novartis, and Takeda Pharmaceutical Co. Boston-based Enlight Biosciences used our venue to break the news about its recent partnership with healthcare powerhouse Abbott Laboratories. One corporate venture investor from a pharma company likened the returns of her fund to “pocket lint” relative to the revenue of the overall company, but said the corporate venture unit is important to the company’s ability to access innovative science. And Westphal even speculated that our own Luke Timmerman is a “SIRT1 over-expresser” because his genes help him stay thin despite his high-calorie diet. (Laugh if you want, but Sirtris’ deep understanding of genes, like SIRT1, that control aging and cellular metabolism helped the Cambridge, MA-based biotech get sold to Glaxo for $720 million in June 2008.)
A recurring theme throughout the day was that big pharmas and innovative biotechs need each other. Generally speaking, large pharmaceutical companies haven’t created enough innovative products over the past decade to justify their huge internal R&D budgets. But biotech has continued to push the envelope to transform risky science into drugs, providing a source of new products to fill pharmaceutical companies’ ailing R&D pipelines. We heard from executives from such local biotech firms as Aileron Therapeutics, Aveo Pharmaceuticals, Hydra Biosciences, and Enlight Biosciences about how relationships with pharma companies are bankrolling their drug-development activities. (Here’s a link to a list of all the speakers who were on the agenda yesterday.)
Our audience of life sciences innovators helped us pack the 16th-floor ballroom of the Hyatt Regency Cambridge. But for all of you who weren’t able to attend the forum, here are seven key insights from our speakers and panelists:
—Raise lots of money when you can. It’s true that the financing climate in 2004, when Sirtris launched, was completely different from the stingier one today. But Westphal—whose company raised $104 million in private financing before its $69 million IPO in May 2007—aggressively raised capital beginning with a $5 million seed round in August 2004. While raising funds for the seed financing, Westphal understood that there was competition among the venture investors such as Polaris Venture Partners (where he is a former general partner). “The VC guys were all mad because they thought they could do it themselves,” he said. Given the high interest from the venture community, Westphal quickly raised $11 million more from investors in September 2004—just a month after closing the seed round.
—Build it boldly, and pharma will come. Huw Nash, vice president of corporate development at Aileron, knows something about drawing interest from Big Pharma. His Cambridge-based company in June raised $40 million in a financing that included the venture units of Eli Lilly, Glaxo, Novartis, and Roche, as well as traditional venture and angel investors. A big part of the allure at Aileron is the company’s “stapled peptide” drugs that have the potential to home in on thousands of different molecular disease targets not reached by previous treatments. (Read Luke’s story about Aileron for a deeper explanation of its novel platform.) “This is the type of solution that [pharmaceutical firms] need to really open the door to a completely new growth opportunity,” said Nash.
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