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Xconomist of the Week: John Reed on Sanford-Burnham’s Drug Pipeline

Xconomy San Diego — 

In the decade since John Reed stepped in as chief executive, San Diego’s Sanford-Burnham Medical Research Institute has basically doubled in size. The nonprofit research facility has added a campus in Orlando, FL, the full-time faculty has grown from 52 to 89, and the overall staff has increased from 520 to 1,200.

Today the institute has five specialized research centers. When Reed took over in January, 2002, there were just two—a National Cancer Institute-designated cancer center and a center focused on aging and neuroscience research. Reed was instrumental in adding a stem cell research program to the neuroscience center (headed by Evan Snyder), and he oversaw the formation of Sanford-Burnham centers for infectious and inflammatory disease, children’s health, and, most recently, a diabetes and obesity center in Orlando.

Perhaps more importantly for the life sciences industry, Reed led development of a 10-year plan that extended work at the institute beyond basic research, with a major program focused on identifying and advancing promising drug candidates. The effort has helped to fill a much-bewailed shortfall in the pipeline of new drug candidates inside Big Pharma companies.

When I recently sat down with Reed, he told me Sanford-Burnham now generates between two and four small molecule drugs a year that are considered valid clinical candidates—along with one to two protein drug candidates that are ready for final animal studies that make it possible to start human clinical trials.

In addition to serving as the institute’s chief executive, Reed continues to do research focused on apoptosis (programmed cell death) and other fundamental mechanisms that regulate the lifespan of the cell. He oversees a lab with about 40 people, and told me he writes about 25 applications a year for grants from the National Institutes of Health. He has published more than 800 scientific papers, and was named earlier this week as editor-in-chief of the journal Molecular Cancer Therapeutics, a publication of the American Association for Cancer Research.

Reed also is listed on more than 90 patents, and was a founder or co-founder of four companies, including Idun Pharmaceuticals, an anti-cancer drug developer founded in San Diego by Reed, the Nobel laureate H. Robert Horvitz, Larry Bock, and Larry Fritz. Pfizer acquired Idun for $200 million in 2005. Conatus, a San Diego startup founded mostly by former Idun managers, acquired the Idun business from Pfizer in 2010.

Here’s my account of our conversation, condensed and edited for clarity:

Xconomy: How has the core strategy evolved since you first arrived here 20 years ago? So much has changed since you took over from Erkki Ruoslahti, the former CEO.

John Reed: I was here roughly 10 years when I was asked to move into the CEO role, and then we put together a 10-year plan, which we did execute. We did other things in an opportunistic manner, such as starting a site in Florida, which we did not anticipate.

John Reed

When I first came here the institute was doing exclusively cancer research, and the nature of our basic science discovery at that time was such that we would bump into all kinds of things of interest to neurodegenerative diseases, metabolic diseases, inflammatory diseases. So we decided to broaden the scope of therapeutic areas the institute works on. We now have five different research centers, with cancer being only one of them.

Probably more importantly, we saw the change in the investor community in terms of how far one had to take projects in order to gain investor support. When I first came to town, I started my first company based on a few targets and we really had no idea how we were going to translate them into drugs. But we had some cool targets in a hot field at the time, apoptosis was the fastest growing area of medical research for a period, and you could get venture capitalists to give you money and off you went. Back in those days, too, you could IPO your company with positive results from a Phase I trial. So it was a whole different era.

Then we saw things shift to this investor sensitivity around risk. So to get your project through to commercialization you were going to have to go further downstream.

So we realized that we weren’t going to be able to rely on a company to generate a prototype lead. We were going to have to do it ourselves. So we launched what we called the chemical biology initiative, which was sort of our code for drug discovery. It was done at a time, frankly, when people didn’t think we could do drug discovery in an academic environment. So we called it chemical biology and actually our center is called the “Conrad Prebys Center for Chemical Genomics.” But it’s effectively a drug discovery center.

The key there was not to rely on academics to do this, but to recruit people from pharma and biotech who really knew something about drug discovery, and to make them part of this blended workforce that we have here that combines discovery science by academics with core competencies in drug discovery and early stage drug development.

X: When did that transition occur?

It started about 10 years ago. We started to build capabilities like high-throughput screening, and bringing in professionals to help us. We were able to recruit a fabulous leader for that with Michael Jackson. He’s a name to remember. He ran Johnson & Johnson’s discovery operation in the United States for a number of years. He had about 700 people reporting to him and put almost 60 NMEs [new molecular entities] in their pipeline.

We decided to build a highly collaborative model where we built teams around projects that would have biologists and chemists, structural biologists, bioinformaticists, and engineers. So we’d get these big multi-disciplinary teams focused around projects. So it was really team-based science, collaborative science. And we did a lot of things culturally to make collaboration sort of the mantra of the organization, from our mission statement on down.

It really did and does work. The citation impact is one indicator that it does work. It’s not because our scientists are any smarter than anybody else’s. I often point out that we’ve only had one National Academy of Sciences member out of our 89 faculty members. In fact, I’m a little miffed because of the politics around it. So it’s not like I’ve got 50 National Academy members to explain why we’re No. 1 in citation impact in the world. It’s because we work well as a team.

We also have been the only organization to have rising NIH grant revenues at a time when budgets were flat or declining. We’ve had eight consecutive years of double digit growth in our NIH grant base. We’ve become the third most-highly funded of the laboratory-based nonprofit research institutes in the country, we do about $90 million in NIH grants and $110 million overall. We weren’t even in the top 10 when we started.

It’s unusual for an organization of this size to have nine products in clinical development. We have a pipeline of 16 small molecule drug development projects that are moving toward the clinic. And we have at least 15 protein drug projects that are through initial animal model “proof of concept” testing and undergoing further optimization. So the pipeline we’ve created of additional therapeutic opportunities, just in the last decade, sort of speaks for itself.

X: So how does that handoff occur, as you move from R&D to commercialization?

JR: We’ve had several models, they include pharma partnering, which can be either a project at a time and they’ll come in and license it. Or we may collaborate for a couple of years before they move it to the clinic. Then it’s pretty much in their hands.

Others are more thematic partnerships. For example, the one we have now with Johnson & Johnson in neuroscience, where J&J has a right of first refusal in the areas of Alzheimer’s and neuro-psychiatric diseases. They are funding an initiative where we bring a number of drug discovery opportunities to them every year. They then fund for us to go through the screening and to generate chemical leads and move them to a proof of concept stage, and they then have the option to license those and move them forward either independently or in a collaborative effort with us. And in that context, we are doing multiple projects with them every year in neuro-psychiatric diseases and neuroscience.

X: Are you working with anybody besides J&J?

JR: Well we have a partnership with Takeda in obesity, and we’re joining the Pfizer Centers for Therapeutic Innovation. They have a number of institutions that are eligible to nominate project opportunities. So we’ve got a project that’s being launched now in the area of inflammation and auto-immunity.

That’s probably the main thrust of our commercialization effort. The opportunities around candidate therapeutics really are probably the biggest one.

We have efforts in protein therapeutics as well. Those tend to bubble up in a more spontaneous way out of the laboratories, which then create additional licensing opportunities. We actually have, believe it or not, eight protein or peptide-based drugs in clinical development right now in the hands of different partners. Another 20 protein drugs are in various stages, from concept through proof of concept in animals. That has just bubbled up out of the laboratories without a master plan created around it. So that’s another area that’s ripe for commercialization.

So it’s a great pipeline we’ve developed. It’s one of the things we’ve been very focused on in terms of our strategy.