Where Are Tomorrow’s Blockbuster Biotech Drugs Coming From? You Might be Surprised

Xconomy National — 

The San Francisco Bay Area has a storied tradition as the birthplace and leading hub of biotechnology, but something curious has happened the past couple years. Most of the scientifically groundbreaking, medical-textbook rewriting, financially lucrative new biotech drugs of the 21st century are coming from somewhere else.

This dawned on me last week as I started thinking about the 20-year outlook for the Bay Area life sciences cluster, in advance of the Bay Area Life Sciences 2031 event I’m organizing in San Francisco on Wednesday evening. It forced me to think about the really innovative drugs that still have a chance to generate billions of dollars in revenue two decades from today, that will help people live longer and better lives, and that are blazing new scientific trails. I’m talking about drugs that are a scientific, clinical, and business trifecta—drugs like Gleevec, Avastin, Herceptin, and Enbrel.

Plenty of molecules in the hopper today have that kind of potential, but for the purposes of this subjective parlor game I wanted to focus on the ones that have generated proof through pivotal clinical trials, and have either recently won FDA approval or are clearly on the verge of approval. That makes for a pretty short list:

• Vertex Pharmaceuticals’ new drugs for hepatitis C and cystic fibrosis

• Human Genome Sciences’ treatment for lupus

• Dendreon’s immunotherapy for prostate cancer

• Seattle Genetics’ “empowered antibody” for rare lymphomas

• Amgen’s antibody for osteoporosis and cancer

• Plexxikon and Roche’s genetically tailored treatment for melanoma

• Genentech’s souped-up version of Herceptin for breast cancer

A couple of things jump out at me right away. Of these eight new molecules, two are coming from Boston, two are from Seattle, one is from Washington, D.C., one is from greater Los Angeles, and only the last two are from the San Francisco Bay Area. These products are important not just for shareholders, patients, and scientists, but also for their respective regions, because they stir up … Next Page »

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7 responses to “Where Are Tomorrow’s Blockbuster Biotech Drugs Coming From? You Might be Surprised”

  1. Another great piece, Luke. Two comments:

    In my days of licensing, our strategy was to keep abreast of developments across the industry, specifically because we did not think it was useful to “place bets” on where the next valuable discovery would come from.

    Second, I think it’s about time that tech transfer offices are getting on board. I dealt with many, many offices across the country. Some were efficient and business minded, some were a disaster. I worry that it might be a little too late, though, with Bayh-Dole under mounting pressure. Universities are not in the business of commercializing technologies – that’s what industry is for. Institutions that tried to create ersatz VC firms or change their tech transfer offices to “commercialization offices” were wildly unsuccessful. However, it serves society much better if universities actively seek commercial partners to take these discoveries from the dusty halls of academia into the hands of the public. I wish them luck.

  2. Jason Chew says:

    Totally agree. In my investing, very few from bay area. As an SF native, it’s disappointing. But in my view, may be due to a range of factors from large established biotechs such as Genentech buying out promising early stage companies to talented individuals pursuing the hi-tech life over biotech.

  3. I really wish we would all stop focusing on “blockbusters.” There are a lot of unmet needs across many diseases that will never result in a “blockbuster.” Just because a drug is not a blockbuster it does not mean it is unsuccessful clinically or financially. I often wonder how many non-blockbusters with real therapeutic value are never developed due to these mega-financial reasons.

    I understand that drug development is expensive and difficult, and that VCs want a return. But blockbusters should be the exception, not the rule. We need more therapies in areas such as Pain Management and ADHD that can help more people, even if they are not blockbusters. Having fewer, high priced blockbusters is not a viable long-term strategy for the industry or its investors.

  4. With only ~20 NDAs/year (with many of them just derivatives), no geographic area looks good in a snapshot. Instead, take a longer view of the Bay Area, particularly some of the firms that have cashed out: Sugen (which contributed Pfizer’s Sutent), and antibody companies Abgenix (the origin of Amgen’s Vectibix) and PDL.

    Also, to add to your list, I believe Exelixis has XL-184 in P3 or later, and I think you can count Onyx’s Nexavar, except its’ approval may not be recent enough for your analysis.

    And I hear a small local firm named Genentech may have developed a few innovative therapies ;)

    From my view – 2000 miles from SF – the Bay Area is far and away the leading font of innovative therapies. This will probably accelerate once Genentech folks begin recycling.

  5. @Jason—interesting thought there about talented young people pursuing high tech careers instead of biotech. I have some thoughts on this as someone who edits a lot of stories about tech, yet concentrates my own writing on biotech. Maybe there’s some future grist there for a column.

    @Lacerta—I hear what you’re saying about the emphasis on blockbusters. I think there’s plenty of room for drugs that are scientifically and clinically important, but maybe only worth $100 million or $200 million a year in sales. There’s something really wrong with the business model if no one wants to invest in drugs like that. The markets that you mention, though, are very big and attractive—I just don’t think there’s been major scientific innovation there in a long time.

    @Tim—I thought about Exelixis’ XL184, but the data is still too early to say it’s really on the cusp of blockbuster status. I will also be curious to see if this latest wave of Genentech alums will re-populate the Bay Area with more entrepreneurs creating innovative new drugs.

  6. Andre says:

    Where does San Diego fit in? There hasn’t been a much growth lately, but…

  7. Andre—good question about San Diego. The only locally-generated drug that I think is close to fulfilling the scientific, clinical, and business criteria listed above would be Isis’ mipomersen for cholesterol-lowering. But there are still quite a few questions on mipomersen that I’m not sure about, like pricing, and how widely it will really be used. Amylin’s Bydureon looked a year ago like it was on this track, but has really been hurt by the FDA delay and the latest DURATION-6 clinical study.