Reality is Virtual at San Diego’s Tioga Pharmaceuticals

Xconomy San Diego — 

The chief medical officer of  Tioga Pharmaceuticals, a start-up working on a drug for irritable bowel syndrome, is in North Carolina. The company’s regulatory team is in San Francisco. Its chief operating officer works from an office at San Diego’s Forward Ventures, the venture capital firm that formed Tioga. He also happens to be the company’s only fulltime employee.

A weak economy has combined with product development setbacks to turn once-promising companies into virtual ones. Witness the winnowing of San Diego’s TorreyPines Therapeutics to just three employees after it sold off much of its portfolio in June.

By contrast, Tioga is virtual drug-developer by design. The company outsources all aspects of clinical development—human trials, chemistry and manufacturing, regulatory, legal and IP management—in a business model that keeps overhead to a minimum as development progresses from one phase to the next.

Forward has advocated this business model for a while, and its moment may be at hand.

“I am a big believer in this approach to doing business, especially in difficult times like these,” Forward Ventures partner Stuart Collinson told me when we chatted last week. “When you see a traditional company, and count the employees and see the buildings and all those things, it is not a good model when every dollar of capital has to be used as efficiently as possible.”

In some respects, the model can be traced back to the beginning of the biotechnology industry 33 years ago. Genentech was little more than a virtual company when it negotiated the research contract with scientists at City of Hope National Medical Center in Duarte, CA, that lead to the first genetically engineered drug.

The parallels, of course, end there. Genentech invented something entirely new, genetically engineered human insulin, and went on to become … Next Page »

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Denise Gellene is a former Los Angeles Times science writer and regular contributor to Xconomy. You can reach her at Follow @

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