Texas Medical Center Makes Pitch to Boost Houston Biotech Startups

Xconomy Texas — 

The Texas Medical Center is slated this week to unveil its new life sciences accelerator, to be housed in a former Nabisco cookie factory near its main Houston campus.

The accelerator is part of a larger effort by the medical center, which is considered one of the world’s largest, to play a more active role in engaging with Houston’s biotech community and leverage its considerable resources to help those startups get traction.

Bobby Robbins, the TMC’s president and CEO, has said that he believes Houston can be home to an ecosystem on par with those in Boston or San Francisco, and that the TMC can play a vital role in helping the city get there.

“We’re going to open in October the country’s largest life sciences accelerator for taking startups and helping shepherd them through” the commercialization process, he said at an August lunch of the Hotel Lodging Association of Greater Houston, according to the Houston Business Journal.

The TMC accelerator plans to have lawyers, venture capitalists, mentors, and staff on site to help early stage biotech companies move from “the idea on the back of a napkin” to the next new drug or medical device, he added.

Robbins and Bill McKeon, the medical center’s chief operating officer, declined through a spokesperson to speak about the new accelerator or other plans to boost the city’s biotech sector.

The effort kicked off in January with a two-day VIP retreat at Houston’s Museum of Fine Arts. Since then, regular meetings of stakeholders—heads of medical and educational institutions, venture and other investors, life sciences entrepreneurs, and others—have taken place to flesh out how TMC could catalyze the city’s resources and talent, according to several people who have attended those meetings.

The planning of the accelerator, as well as other features of the TMC’s strategic plan—related to genomics, regenerative medicine, clinical trials, and health policy—has been in the works throughout the year and a topic of much discussion among those in Houston’s biotech ecosystem. The TMC is not only considering setting up an accelerator but also creating a campus that could house biotech and pharma companies, office space for the TMC and its member institutions, as well as possible retail and residential components, according to discussion points for a June meeting of its Innovation Strategy Design Team.

“This could provide a true aggregation point for startups and entrepreneurs and service providers within life sciences in Houston that just hasn’t happened before,” says Blair Garrou, co-founder and managing director of the Mercury Fund, a Houston venture capital firm. “Other projects haven’t been able to pull in startups in a way to allow them to collaborate with one another.”

Certainly, the TMC—composed of 59 member institutions with 7,000 patient beds and 106,000 employees—has a footprint, resources, and domain expertise that could play a deciding role in whether Houston establishes a biotech community on par with those in Boston or San Francisco. So far, despite Houston’s considerable biotech knowledge base, the city has been home to very few major hits. (Tanox, which developed the asthma drug omalizumab (Xolair), is a notable exception. In 2006, the company was acquired by Genentech for $919 million.)

The dearth of similar stories comes partly from a lack of focus on commercialization, observers say. “The TMC created an environment that made healthcare delivery the best in the country, but the focus on commercialization didn’t happen at the same level that you saw at other R&D clusters,” says Gray Hancock, co-founder and COO of medtech startup Decisio Health and a longtime Houston life sciences entrepreneur.

“It’s a great thing to see that attitude changing,” he added. “The fact that TMC is getting behind and promoting commercialization is huge.”

Details of TMC’s plans are expected to be revealed Thursday at an invitation-only event at the accelerator site. Many in Houston’s biotech community are eager for more details not only on the accelerator, but also on a possible seed fund the TMC might raise from member institutions that would invest in accelerator companies as well as the possibility of a move by Johnson & Johnson to set up an innovation center in Houston. A Texas outpost would be the fifth in a J&J program that seeks out and helps to develop promising early stage life sciences innovations.

In an e-mail, Meghan Marschall, a spokeswoman for Johnson & Johnson Innovation, did not say if a Houston J&J innovation center is in the works but said that “we are extremely supportive of efforts to support early-stage entrepreneurs and innovation in any region and are impressed by Texas Medical Center’s new innovation center.”

Setting up that sort of program in Houston would mark a strategic shift in how local biotechs are evaluated and nurtured, says David Schubert, executive director of the recently shuttered Houston Area Translational Research Consortium at Rice University and the COO at Accelerator in Seattle.

“You have industry scientists that are working every day and triaging deals and technologies and helping people really understand what the next steps are in a scientific commercial game plan,” he adds.

Houston biotech entrepreneurs and investors say they support other more tactical measures that they believe will ease the path to commercialization. Among those include each TMC member institution—a collection of university and private hospitals, medical, pharmacy, dental, and nursing schools—offering standard licensing and IRB contracts. “Each tech transfer office will say that there really isn’t a standard deal but you could make some parameters to make the process weeks long rather than months long,” says Atul Varadhachary, managing partner at Fannin Innovation Studios in Houston. “The TMC is uniquely positioned to play this role.”

Varadhachary says a number of institutions do this, including the University of North Carolina at Chapel Hill, which began to offer an “express exclusive license agreement” in 2009. In remarks to a Congressional subcommittee in 2012, Catherine Innes, who headed UNC’s Office of Technology Development at the time, said of the 19 companies the university commercialized since it implemented the streamlined process, only three opted to negotiate their own contracts.

Speaking at a BioHouston breakfast last month, Doris Taylor, director of the new Center for Cell and Organ Biotechnology, a $3 million collaboration between the Texas Heart Institute and Texas A&M University, said such a document could help the TMC take full advantage of its enormous patient numbers for clinical trials. “People outside of the TMC don’t think of the enormity of the TMC as a whole,” she says. “That’s got to change.”

Easing the pathway for commercialization can up the odds for a greater number of successful biotech launches. And that would help the ecosystem in another way by creating a deeper bench of seasoned life sciences executives. “I may love the technology but I invest in management,” Schubert says. “Good management can fix a bad technology; bad management can destroy a good technology.”

Decisio Health’s Hancock points to Houston’s energy sector, which he says is a robust mix of large established companies as well as more entrepreneurial ventures, as how he’d like to see the city’s life sciences community develop. “You can take a gamble on a early-stage company and, if things don’t work out, you have 20 companies where you can go and get a job,” he says of potential energy entrepreneurs.

Those options, he says, encourage risk-taking. They also would help to groom the next generation of life sciences CEOs.

He and others say a TMC accelerator would have great impact following a model employed by Surge Accelerator, the energy IT startup program founded by Kirk Coburn three years ago. Surge is now accepting applications for its fourth class. On average, each of its startups has raised just more than a $1 million in funding.

“Surge essentially says, ‘Look, we’re going to screen a handful of companies that are developing next generation technologies that we think are going to be interesting to you and you get a first look,’ ” Hancock says. “That really speeds up the ability (for those startups) to enter the market.”