How to Stimulate Biotech? Gillis, Chhabra, Williams Sound Off
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“Our goal is to work independent of the economic environment,” Chhabra says. “In the world of private biotechs, the economy is always tough. It’s really about getting the greatest amount of value in the shortest period of time.”
On whether it’s better to build a company, or a project: “You build a company by starting with a project.” Allozyne is starting with its project, a longer-lasting interferon drug for multiple sclerosis, and then it hopes to pump out more products from its platform technology that enables it to modify protein drugs in many different ways. “Ten years down the road, we hope to look more like ZymoGenetics, an actual company.”
On the difference between Canadian and American biotech (she’s from Toronto): Access to venture capital in the U.S. sets it apart from Canada and the other G-8 industrialized nations. “VC’s hunger and ambition fuels management teams. That’s not necessarily there when the money comes from the government,” she said.
Doug Williams, CEO, ZymoGenetics
On why anyone should still invest in biotech: “Certainly the expectation of being able to do another Immunex, in which it takes 18 years to get to sustained profitability, I mean, the payoff was extraordinary, but let’s be honest, that’s pretty rare in this business. The old model of waiting 20 years for a company” to succeed like that, Williams said, “it’s not going to happen.” This puts extra pressure on step-by-step milestones, showing progress points that create value along the way, he said.
On what to do with that cash: “I’ve yet to see a company make it big by hoarding their cash,” Williams said. “I’m pathologically optimistic that things will turn around, because you have to be.”
On what the government can do to stimulate biotech: Williams offered some support for the idea of what’s been called the biotech bailout, in which companies get tax credits for the operating losses they’ve accumulated through the long years of R&D. The reason to do it is to maintain U.S. leadership in the biotech industry. “Biotech is a shining example of what we can do,” Williams said.
Michael Emery, Senior Equity Portfolio Manager, Rainier Funds
On what he looks for in a biotech investment: Emery said he looks primarily at the company’s management team, market opportunity, and its business model and cash flow. Notice, he didn’t mention deep due diligence on the technology. “I’m upfront with management teams, a lot of us are financial types, and a lot of us don’t understand the technology.” He added that at a $15 billion fund like his, it’s not worth his time and money to hire expert technology consultants every time his firm makes an investment, at least until after the fund has more “skin in the game,” he said.
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