Talking Bio-Research

talkgbiorIn fact, you should know that impediments to creating a biotech spinoff are being overcome at an impressive rate. A recent study by the Center for Economic Policy Research at Stanford Univ. found that “biotechnology stands out almost uniquely” as an academic source of practical inventions. “There is an unusually close proximity between basic research and commercialization” in biotech, says Nathan Rosenberg, who also runs the Autism Biomedical Information Network.

Or, as one bemused researcher at Harvard Medical School put it: “To be anybody in biotech anymore, you have to have your own company.”

So how do you start? It’s a good bet you’ve already picked out a company name with “bio,” “pharm,” or “gen” appearing someplace in it–what’s next? The experiences of startup veterans James Hayward, Joanne Leong, Tracy Wilkins, and John Edwards suggest this strategy: Outside of a few ethical guidelines, throw out any conventional wisdom you are unfortunate enough to have learned, and be ready for anything. Both your assets and your liabilities are likely to come in surprising packages.

Cosmetic insights. James Hayward started Collaborative Laboratories, East Setauket, NY, a company that produces liposomes in metric-ton quantities. The liposomes are used in drug delivery, flavor stabilization, and other applications. A former professor of biochemistry at the State Univ. of New York (SUNY) at Stony Brook, Hayward cites as a critical factor in his success a history of consulting to the cosmetics industry, which uses liposomes as “depots” for fragrance.

Beyond the narrow technology issues, says Hayward, “my experience in cosmetics was very useful. That industry is fashion-driven, so it’s very fast-paced. We |at Collaborative Labs~ set guidelines for developing products with very fast tracks for development. If a project couldn’t generate income for the company within three to six months, we wouldn’t take it on. Needless to say, that greatly refined our choices.

“We were lucky,” he continues. “We had some serious hits in the beginning. For that reason, we were able to do what biotech companies almost never do: fund our own continued development from profit, not venture capital.”

Hayward also credits the Long Island High-Technology Incubator, Stony Brook, for helping his company through its early stages.

Collaborative Labs has expanded its research activities and just announced a major new alliance with SUNY.

Fish vaccines. Joanne Leong, a professor of microbiology at Oregon State Univ., Corvallis, formed Marigenetics in order to market fish vaccines that she developed with gene-cloning techniques. Leong’s resume contains an item that few entrepreneurs can match: She is a former graduate student of Herbert Boyer, the co-discoverer of recombinant DNA who helped create the original biotech spinoff–highly profitable Genentech.

Leong quickly makes it clear, however, that convenience, not profit, induced her to spin off Marigenetics. By law, since the technology was developed with U.S. funding, it could be licensed only to U.S. companies. Unfortunately, only European companies showed interest. “In a research lab, I wasn’t in a position to make vaccine for everybody” who wanted to use it, says Leong. So she created the company. “Whether it will survive is another story,” she says.

The company is still in an R&D stage but has attracted some Small Business Innovative Research (SBIR) grants.

Entrepreneurial stress. Tracy Wilkins has this warning for academics whose eyes are fixed on a CEO’s chair: “Many people in the university are not cut out for that kind of stress.” The anxieties of meeting payrolls and the like, he says, lead to “waking up at 3 am with your gut in a knot.”

Wilkins is a professor at Virginia Tech, Blacksburg, and director of the university’s Biotechnology Center. He has founded two companies. The first, called TechLab, markets diagnostic kits for life-threatening forms of diarrhea, and operates on revenue generated from sales of the kits. The second is a venture-backed company, called TransPharm, that produces Protein C (an anti-blood-clotting agent) in the milk of transgenic pigs. TransPharm recently merged with a larger firm.

TechLab has benefited from its association with the Virginia Tech Corporate Research Center, whose planners were delighted to accommodate a university entrepreneur as the facility went up in the late ’80s. Wilkins was able to spec out his labs from scratch. The Center’s access to university facilities, says Wilkins, “makes us appear to be a larger company to someone on the outside.”

Wilkins contrasts the two different routes to forming a company: “With a venture-backed company, you have to realize that unless you want to quit the university at some point, the company will outgrow you. |But~ in the case of a cash-flow company where you own all the equity, it’s your baby. You can grow at a slower rate.”

A balanced company. It’s easy to forget that the technical innovator often is a secondary force in forming a company. John Edwards, whose experience is on the business side of startups, approached Nile Hartman after reading about his biosensor research at Georgia Tech, Atlanta. With the help of Tech’s Advanced Technology Development Center, Edwards and Hartman eventually formed Photonic Sensor Systems.

“It’s essential that you get people who know both the technical and business sides in any small company,” says Edwards. “Technical leaders sometimes have trouble letting go of management control.

“Here, |Hartman~ worries about the technical end and I worry about the management end. It’s a wonderful relationship.”

The company, just two years old, now has several grants and an alliance with an environmental firm.

At this point, you’re practically ready to pick up the phone and announce the launching of your company, but you wonder–is there a downside?

Researchers should remember that by trade they are “excitement junkies,” says Glenn Prestwich, director of the Center for Biotechnology of SUNY at Stony Brook, from which the Long Island Incubator split off. “Researchers are insulated from the day-to-day tedium of business,” he says. “They’ve got to have a fix of exciting new results every week or they’re not happy. Business isn’t like that–if you have too much excitement, you’re not doing business right.”

Then there are issues such as conflicts of interest and time spent away from university work. The latter generally can be ironed out “as long as the faculty members are not fobbing off their teaching on someone else because they’ve got to fly to California to boost stock prices,” says Franklin Loew, dean of the School of Veterinary Medicine at Tufts Univ., North Grafton, MA. Agreements must be made openly and work performed with university resources must be publishable, Loew points out.

As to fears of endangering the purity of basic research, Loew says that “faculty members are often very grateful for corporate sponsorship. On the other hand, many of them are moved to be hypercritical of the profit motive when asked to publicly comment on it.” Loew belittles this as a form of “academic sophistry.”

All of this should tell you whether you’re a natural for the role of corporate CEO, but if you’re still in doubt, there is only one way to know for sure.

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