“Raw Potential” And Three Other Takeaways from NY’s Life Science Disruptors

Xconomy New York — 

The Alexandria Center for Life Science currently houses some of the most ambitious biotech startups in New York, not to mention some outposts for pharma companies like Roche and Pfizer. Not bad for something that, as Alexandria Real Estate Equities CEO Joel Marcus said, “was a contaminated laundry site” just a short time ago.

The change Marcus described as he kicked things off last night at our latest annual New York biotech event, “New York’s Life Science Disruptors,” was symbolic of what’s happened in New York over the past few years. This is a biotech community being built from the ground up by institutions, entrepreneurs, and, of late, early-stage investors. It’s nowhere close to the biotech startup hubs of Boston and San Francisco. Change like that could take decades, and for it to happen, New York needs, as Flagship Ventures partner Doug Cole said, its own Biogen, Vertex Pharmaceuticals, or Genentech—companies that grow, succeed, and contribute important drugs.

“Once people start seeing some reference companies, they will gravitate towards wanting to do the next ones,” he said. “And those companies will spawn the people who will do the ones [after that].”

That type of productive ecosystem is a long way off, and New York biotech has a lot to figure out first. It needs to overcome the looming losses of community leaders Marc Tessier-Lavigne (president of Rockefeller University) and Laurie Glimcher (dean of Weill Cornell Medical College), solve its seemingly never-ending lab space problem, and find affordable housing for its employees—particularly those coming right out of school—in one of the most expensive cities in the world.

But the difference now in New York is that there are potential candidates to become big biotech companies in the future that, in turn, could breed more biotechs the way they do in Boston and San Francisco. Startups like Kallyope, Petra Pharma, and Lodo Therapeutics—companies spun out of New York institutions, backed by big venture rounds, with aspirations to stay in the city—have emerged. Their fates will help determine what happens to the momentum that’s gained in New York.

Thanks to our speakers: Marcus at Alexandria; IBM’s Prasad Kodali; Lewis Cantley of Weill Cornell; Sean Brady of Rockefeller; Accelerator Corp. chief operating officer David Schubert; Flagship partner Doug Cole; Kallyope CEO Nancy Thornberry; Charles Zuker of Columbia University; and Adam Goulburn of Lux Capital. Also thanks to our event host Alexandria, and sponsors IBM, Kenyon & Kenyon, Morgan Lewis & Bockius, and ALT, and to Keith Spiro of Keith Spiro Photography for the photos (more of those coming soon).

And a special thank you to all who came out last night, packed the house, and stayed late to chat. For those that couldn’t make it, here’s a look at some of the action.

Why New York? A chance to move the needle. Sean Brady formed Lodo Therapeutics in January with the help of $17 million from Accelerator Corp. and The Bill & Melinda Gates Foundation—and truth be told, he says, “I should’ve done it about three or four years ago,” given how fast the competition moves in science. But Brady was adamant that he wanted to start a company in New York, not somewhere like Boston or San Francisco. And one of the biggest reasons was he didn’t want to be “just a tag-along person for a series of people who have started a whole series of other companies.”

“It’s just extraordinarily exciting to be at the ground floor of the biotech community,” he said. “You have the opportunity to come in and perhaps make an impact on the first steps of biotech in the city. I don’t think there are that many opportunities in other places to do that in this country.”

Breaking down silos, and going where the money is. Lewis Cantley is perhaps best known for work he did at Harvard Medical School discovering a key enzyme implicated in cancer, and later starting several companies—among them Agios Pharmaceuticals (NASDAQ: AGIO). But Cantley moved from Harvard to Weill Cornell in 2012—ultimately leading to the formation of Petra in January—and he cited two reasons. The first, he said, was that there was “elasticity” at Weill Cornell. He could “take an institution that was already fantastic but mold it” in a way that would help him rapidly translate discoveries into therapies. That helped “break down some of the silos that I found were very difficult in Boston with all the long held traditions at all the hospitals there,” he said.

The second reason? New York has an abundance of philanthropy money, which is critical at a time when it’s harder to get grant money. “Why do you rob banks? Well, that’s where the money is,” he joked.

The discrepancy between potential and success. Doug Cole was initially skeptical when Rockefeller president Marc Tessier-Lavigne asked if his firm was interested in managing the New York City Economic Development Corp.’s life sciences fund. Flagship’s got enough going on in Cambridge, and New York’s biotech challenges are well documented. For one, Cole noted, the area hasn’t “fully learned how to take advantage” of its financial might. There are only a few high-profile startups. There aren’t many “reference successes,” like a Biogen in Boston or a Genentech in San Francisco. But a couple of things piqued his interest nonetheless.

First, the presence of folks like Cantley, Tessier-Lavigne, Columbia professor Tom Maniatis, and Memorial-Sloan Kettering Cancer Center president Craig Thompson, who came from elsewhere, congregated in New York, and “demand respect and attention.” There also “appeared to be an incipient, evolving culture of interest in biotechnology in New York” and a commitment to making it work, including the support of the mayor’s office. That, combined with its high standing in a bevy of other statistics—among them yearly NIH funding and the large number of hospital beds—made it worth Flagship’s time. (The firm is managing a large portion of the NYCEDC’s $150 million fund, though it hasn’t announced a deal as of yet.)

“There’s an enormous amount of raw potential here,” Cole said. “The discrepancy between the potential and success is greater in New York than any city in the U.S. by far, and I think any city in the world. Which is another way of saying that the opportunity here exceeds the opportunity in any other place in the world.”

Kallyope’s “blank canvas.” Adam Goulburn wanted to start a microbiome company. But when he walked into Charles Zuker’s lab at Columbia some three years ago, he ended up with a much different project. While Zuker told him microbiome research was poised to change “how we think about human physiology,” he also told Goulburn “everyone’s looking in the wrong direction.” Namely, there wasn’t a whole lot of attention on the gut-brain axis—a sort of communication hub between the cells in our guts and the central nervous system. As Zuker said, there are millions of neurons in the gut, “the equivalent of three mouse brains.” Understanding how those cells talk to the brain might unlock a whole new way to treat a slew of diseases.

“It’s a completely unexplored territory, a complete blank canvas, and it’s ours for the taking,” Zuker told Goulburn.

Lux teamed with Polaris Partners, The Column Group and a few others to put $44 million into Kallyope in December. The startup, according to CEO Thornberry, will grow to 24 employees this year and double that next year.