Seattle Biotech Needs More Bars, Less University Red Tape, and the Same Daring Attitude, & Other Highlights from Seattle Life Sciences 2029

Xconomy Seattle — 

Seattle has more than its share of brilliant biologists for a medium-sized American city. But if people and ideas are going to properly mix to create a thriving local biotech industry over the next two decades, we could use a few more common places with intellectual sparks—like bars. At least according to one of the region’s top life sciences entrepreneurs.

When in Boston and San Francisco, Stephen Friend says he gets most of his work done by socializing with scientific colleagues he meets for coffee or a drink. Not so here.

“The way Seattle is currently set up, I don’t have a place I go for a coffee or a drink. A place where I run into the people who are ready to try a new idea. That’s an important anchoring ingredient that we’re missing, and should be happening,” says Friend, the former senior vice president of cancer research at Merck, and co-founder of Seattle’s Rosetta Inpharmatics.

(Coffee itself is certainly easy to find, but Stephen may want to check out Xconomy’s handy Greater Seattle Coffee Cluster guide for the spots that are best known as innovation mixing pots.)

That was one of the many insights that emerged during Seattle Life Sciences 2029, a sold-out event Xconomy organized on Monday night at Seattle Biomedical Research Institute (see the photo gallery here). This event brought together a group of industry visionaries who have rarely, if ever, appeared on the same stage in front of a local audience: Ben Shapiro, the former executive vice president of basic research at Merck; Steve Gillis, the managing director of Arch Venture Partners who co-founded Immunex and Corixa; and Friend. The panel was moderated by Carl Weissman of Accelerator and OVP Venture Partners, and biotech pioneer Leroy Hood offered his thoughts in a video message on how Seattle can make strides to get bigger and better at biotech over the coming two decades.

This came up during a freewheeling audience Q&A, which covered a lot of ground. I’m not going to recap everything here—I think with some of the jokes, you probably just had to be there—but here were some of the best little acorns that that I squirreled away with my digital recorder, which are edited as always for length and clarity:

Steve Gillis

Steve Gillis

Steve Gillis on what entrepreneurs need to do to adapt in today’s financial climate: “Entrepreneurs need to be open to combining their ideas with existing organizations. Or combining those ideas with like-minded new proposals from other folks, as opposed to always wanting to have what I call their own pie. In the world in which we live, in which money is quite tight, people have to be open to joining forces earlier in evolution. That will result in everyone having a smaller slice of the pie, but it will also result in the possibility of someday eating pie. Instead of just dreaming about it. It’s a fundamental mind-set that needs to change.”

Stephen Friend on how universities need to relax rules on how inventive faculty spend their time: “The concept that you are either inside or outside of the university, and that some fraction of your time has to be spent inside the university, and that some percentage of your time has to be spent in your role as a tenured professor at the university, that has to go away. It’s the concept that someone could teach courses, and can be a role model for education, has to be kept separate from someone who’s actually running a company. The best example I know of is what MIT is trying to do. That organization, the person who leads it, she [Susan Hockfield] feels the university has to become, in a broad sense, the incubator. I don’t think many people, particularly at some universities in this town, are ready to think that creatively. It’s a mistake.”

Ben Shapiro on how Seattle ranks as a hub for life sciences innovation: “It’s worth taking a minute to consider how successful Seattle has been. It’s created companies that are not just successful as venture investments but in fact have helped to change the practice of medicine. Immunex, for one. People’s lives were transformed, and much suffering was relieved by the ability to translate a basic research phenomenon into something that could provide a meaningful change in people’s lives. Seattle has done it repeatedly. That is pretty interesting, considering Seattle’s relative size. It’s had a high hit rate.

“I like the point that Stephen made about interdependence. It’s got to be open to the idea that it is a relatively small community, with tremendous intellectual capital. I think it could attract more venture capital to the community to get some of these ideas off the ground, and maintain a deep interaction with large pharma and large biotech. That’s really the ultimate path biotech will take here.”

Steve Gillis on whether Seattle needs an anchor biotech company: “You can look at other regions and try to say Seattle has lost its big biotech footprint, and woe is Seattle, isn’t that bad. I seriously don’t think it is bad. When a company like Immunex gets acquired for whatever it was, $14 billion to $16 billion of consideration, that’s a success. When Icos was acquired for $2 to $3 billion of consideration, that’s a huge success.

“Then you go around and say ‘Well, what regions have those big anchors?’ San Francisco. Well, Genentech is gone. Maybe Gilead Sciences, right? That’s one. San Diego? Zero. Boston? Biogen Idec, Genzyme. That’s two. I really don’t think that’s a contest that needs to be won. What needs [to emerge] are multiple smaller companies that are hiring people, making breakthrough discoveries, and developing products that will change the face of medicine. Unfortunately, if they are successful—or fortunately—if they are successful, they will be acquired. It’s natural evolution.”

Stephen Friend

Stephen Friend

Stephen Friend on the importance of having Big Pharma companies with a Seattle presence: “This past year I’ve been thinking about the auto industry. How GM got to the market cap that it got to for a while. That’s the best way to think of pharma and the future that lies ahead for it. I wouldn’t worry about whether you have large pharma in the backyard.”

Steve Gillis on why Washington’s tax structure handicaps biotechnology companies, by taxing revenues, regardless of whether a company is profitable: “The B&O (business and occupation) tax as it exists for biotech companies is essentially a tax on creativity. I understand we don’t have an income tax in this state, and many of us sitting in the room tonight probably like that. But I might trade an income tax for what is really a penalty on success. That’s the B&O tax on revenues for biotech companies. At the past couple of companies I had the good fortune of building, when it came time to make a huge investment in property and equipment, the state of Washington was one of the last places we thought of doing it, because of the tax structure in the state.”

Steve Gillis on the grim future of venture capital firms that support biotechnology: “At Arch we raised our last fund in December 2007. We are still actively in business. But the No. 1 risk that we talk about every Monday morning is no longer technology risk, regulatory risk, management risk, development risk, market risk. It’s syndicate risk. Who are our partners in this transaction? Are they going to be there writing checks alongside of us? Will they honor their commitments? It’s a big thing that we think about. You can’t have a deal today that’s oversyndicated. The more smart people around a table writing checks, the better.”

Steve Gillis on the next company in Seattle with a drug that could transform medicine, like Enbrel: “Ikaria. The science that drove the formation of that company, in Mark Roth’s lab at the Hutch, is one of the most amazing biomedical breakthroughs I’ve seen in years. It will take a while to commercialize, no question about it. It’s fascinating science and it will shape medicine for years to come.” (Ben Shapiro seconded this motion).

Ben Shapiro on whether Seattle has the right ingredients to compete in the future with hubs in China: “With our education system, we should be shaking in our boots. If we can’t do a better job of primary and secondary science education, then I think we’ll have our lunch eaten by these other countries. This is an American crisis, to allow so many children to be left out, in terms of getting access to good education. To have public education falling down in so many major cities in this country, with science education at the very bottom of the heap. To have the fundamental discouragement that happens to so many young people. Every kid at one year of age, or two years of age, is a budding scientist, boy or girl. They are interested in everything in nature and then the education system manages to systematically drum it out of them. By the time they’re in high school, they think it’s boring, and it’s a bunch of names they need to memorize. It’s a national crisis, and it will impact us completely. If I were to say we have to worry about something, I’d say we should worry about the state of the school system for the next 40 years, and the impact it will have on the next generation.”

Ben Shapiro

Ben Shapiro

Stephen Friend on what he sees in China, where he spends 10 percent of his time and has an apartment: “I’d say we should be quaking in our boots and also looking for the new opportunities. The thing about it that’s striking, if you’re in Guangzhou, or Shanghai, or Beijing, you see this attitude of ‘I’m up at 5 am and I’m not going to bed until midnight.’ That’s the attitude of people in their 20s and 30s, of people who are their workforce. Getting ahead, taking two jobs. The hunger that’s in the belly of those people to get things done in science—it should have everyone trying to figure out how to leverage it.”