Todd Patrick is one of those rare people in the pharmaceutical business who can say he built a successful career as a vaccines entrepreneur. He was the president of ID Biomedical, a Vancouver, BC-based vaccine company with operations in Bothell, WA, for 12 years before it was sold to the world’s second-largest drugmaker, GlaxoSmithKline, for $1.5 billion in December 2005.
Patrick, 46, hasn’t had the desire to go back to the full-time pressure-packed life of a biotech executive, but he’s kept his hands busy in four different healthcare startups. He’s now serving on four small company boards, often investing his own money, along with his longtime business partner, former ID Biomedical CEO Tony Holler. I met with Patrick yesterday over lunch at BluWater Bistro in South Lake Union, partly to talk about Xconomy’s upcoming vaccine forum that he’s agreed to moderate, and partly to find out what he’s been up to since leaving his high-profile gig at ID Biomedical.
It turns out that Patrick still has the itch for developing next-generation vaccines that made ID Biomedical so successful. This time, the operation is called Vaxent, a startup in Memphis, TN that he travels to from his home at Yarrow Point once a month. Ironically, he has scooped up the same vaccine for Group A streptococcus bacteria (strep throat) that his team had been developing at ID Biomedical. Glaxo didn’t want it, and handed it over to the startup in Memphis, where much of the original science was done. The strep vaccine will probably need to be tested in huge, costly clinical trials, but it has already been tested in 100 patients, and has provoked antibodies against the strep infection, Patrick says. It’s possible he’ll clinch a partnership with one of the four major vaccine companies (other than Glaxo), which could re-ignite development of this product by the end of the year.
“It’s like starting all over,” Patrick says. “It’s exciting.”
The vaccine business is a vastly different place than when Patrick started with ID Biomedical in 1994. In those days, he told investors it was worth betting on a new generation of proprietary vaccines—like a nasal spray for flu and the strep throat candidate—because health insurers had finally come around to the idea that vaccines provided great value to the health system, and insurers needed to pay for them to encourage development. Vaccines have played a historic role wiping out scourges like polio and smallpox. But in the post World War II era, vaccines were relegated to a low-margin, high-liability pharmaceutical industry backwater. Vaccines for measles, mumps, rubella, tetanus, flu—all were cheap commodities. “I can remember going on the road to meet with investors, and nobody wanted to talk to us,” Patrick says.
Then came the hepatitis B vaccine, made through modern genetic engineering, which Merck and Glaxo offered at $150. Then came the haemophilus influenzae type B at $100 a dose. A new chickenpox vaccine at $150. Then the motherlode: Wyeth’s pneumococcal vaccine for infants (Prevnar) was approved by the FDA in 2000. At $230 for a four-dose course of therapy, it created a market that generated $2.4 billion in sales last year.
“It’s been about pricing,” Patrick says. “If you can get good margins, capital will be attracted.”
Of course, the vaccines business can’t defy the current gravitational pull of the capital markets. It’s made him glad he’s not in the hot seat running any of the companies he’s gotten involved with. “It’s been brutal to raise money for companies that are losing money. I’ve never seen anything like it,” he says.
The reception from investors would surely be different this time, if they weren’t fixated on the downturn. “Todd is exactly the right guy to be able to do this,” says David Miller, president of Biotech Stock Research, an independent equity research firm in Seattle, and a former ID Biomedical shareholder. “This (strep throat vaccine) has a long regulatory road because of mistakes by others who developed similar drugs, but I think he knows exactly how to get it done.”
Besides vaccines, Patrick has gotten involved with a variety of other small healthcare companies. “There’s no real common theme” to the companies, he says.
—Response Biomedical. This Vancouver, BC-based company offers real-time diagnostic tests for a variety of infections, which doctors can run in their office. The stock has plummeted , down more than 80 percent this year, closing at 17 cents yesterday on the Toronto Stock Exchange. “Here’s a company that has done everything they said they were going to do, fulfilled the strategic plan, and no one cares. It’s tough,” he says. (This one especially hurts, since Patrick says he put in $700,000 of his own money.)
—Inviro Medical Devices. This Atlanta-based private company makes safety syringes, so that needles don’t transmit infections through accidental pinpricks. This company is on track to produce $2 million in sales in 2008, up from $1.2 million a year, ago, even though it has been cut from 18 to seven employees. “We’ve had to cut staff and expenses to get to cash flow positive as soon as possible,” Patrick says.
—CRH. This Vancouver, BC-based company makes a disposable, pain-free device for removing hemorrhoids. It’s an appealing alternative to surgery, which apparently can be painful, Patrick says, although neither of us really want to know. This company has had an aggressive growth strategy, to build up 17 retail health clinics around the country, advertising its service directly to patients. “It’s like the Lasik eye surgery model,” Patrick says. It has 50 employees and is growing fast, although if it puts the brakes on growth, it would still take until the third quarter of 2009 to turn profitable, he says.
These days, Patrick is also involved with a pair of nonprofits, the sort of thing he was too busy for during his corporate days. One is the Seattle Biomedical Research Institute, where he serves as vice chairman of the board, and is working to help find partners to help develop its experimental malaria vaccine. The other is the Bellevue Boys and Girls Club. “I want to be able to give something back,” he says.
He’s also finding time to golf, go fly fishing, ski, and go duck hunting. I asked if he’d ever consider coming back to run a company, and he left the door open to the idea, but said he’d want to make sure it’s the right opportunity. “I’d think about it,” he says. “I’m not that good a golfer.”
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