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Thursday / December 14.

How to Win at the High Stakes Game of Biotech Innovation

On September 11th, 2017, in front of an illustrious audience that included Kofi Annan, former Secretary-General of the United Nations, and Melanie Schultz, Dutch Minister of Infrastructure and the Environment, an antibiotic alternative developed by Micreos, a Dutch biotech company, was named the most impactful innovation in the Netherlands.

“Antibiotics do not distinguish between bad and good bacteria, and their use induces resistance,” explained Mark Offerhaus, CEO of Micreos, during his pitch at the event. “With our endolysin technology, it is possible for the first time to kill only the unwanted bacteria, regardless of antibiotic resistance, without induction of resistance, and without release of toxins in the environment.”

Presented by Ideas From Europe, a foundation committed to solving global challenges, the award represented the culmination of years of research and development, testing and iteration, and marketing and distribution by Micreos. The company’s antibiotic alternative, about which Annan expressed his excitement, was inarguably the product of a visionary CEO, a talented team, and a truly extraordinary technology.

But due to an industry-wide lack of support for biotech startups during a critical phase in their development, the success of Micreos was also a matter of luck.

Biotech: A Risky Bet

For biotech innovators, taking a biopharmaceutical from the test tube to the market is not easy. According to Dr. Menzo Havenga, CEO of Batavia Biosciences, only 1-in-50 biopharmaceuticals actually achieve commercialization. Of those that fail to reach consumers, 39% lack the desired pharmokinetic profile, 30% cannot demonstrate efficacy, 11% display toxicity in preclinical trials, 10% produce adverse effects in humans, and 10% are too costly to produce at scale.

At 50 to 1, the odds against innovators are steep. With the average cost of commercializing a biopharmaceutical estimated at $1.5 billion, biotech startups can best be described as risky bets in which the stakes are high and the wrong decision can cost investors hundreds of millions of dollars.

But, as demonstrated by Micreos’s breakthrough antibiotic alternative, which may save millions of lives by eliminating antibiotic-resistant infections, these are bets that must be made.

The twin pressures of high risk and high reward compel biotech innovators to act with an abundance of caution. They spend years in research and development, seated at benches in their labs, actively seeking the right candidate for commercialization. Once such a candidate is found, they work hard to build a team of capable scientists, regulatory specialists, and trustworthy investors.

Before moving into preclinical trials, biotech innovators create a timeline to profitability, which shows investors exactly how much value will be produced and how much money will be spent in each phase of the regulatory process. By clearly outlining the amount it will cost a startup to reach the market, these timelines let investors know when to play another round and when to cash out.

Removing Luck From the Equation

In recent years, the number of biotech incubators has increased considerably. These incubators generally offer startups a range of services, including office and lab space, as well as access to experts and investors. JLABS, a biotech incubator run by Johnson & Johnson, has nine locations in North America alone.

But while incubators help innovators validate their research, build robust teams, and connect with investors, at a certain point their support ends. This is generally the point when innovators move from fundamental research to applied research, swapping lab experiments for preclinical trials, and test tubes for bioreactors.

It’s the point when each decision suddenly costs significantly more than the one that came before it. It’s also the point when innovators need a system of support the most, and usually find they have no one to rely on but themselves and luck.

DTIS facilities have been designed to compress a startup’s timeline to profitability.

Fortunately, support systems are appearing that have been designed to assist biotech startups during this crucial stage of their growth. Batavia Biosciences, a contract development and manufacturing organization based in the Netherlands, has created a range of products and services to help innovators minimize the amount of time and money they have to spend overcoming regulatory hurdles.

My own company, Dovetail Integrated Systems (DTIS), has developed a biopharmaceutical production facility that can be leased by a startup and assembled anywhere in the world. Designed to shrink the cost of commercialization by hundreds of millions of dollars, DTIS facilities allow innovators to focus less on building a plant, and more on reaching the market.

By supporting startups in the applied research phase with technology and infrastructure designed to cut their costs and trim their timelines, organizations like Batavia Biosciences and DTIS are removing luck from the equation.

Drawing the Winning Hand

The rapid spread of biotech incubators suggests a widespread need among innovators for robust support systems. But the current focus on incubators overlooks the long-term needs of innovators, especially those who are starting preclinical and clinical trials.

There is an opportunity for the growing number of incubators to collaborate with contract manufacturing organizations and infrastructure providers in a way that supports biotech startups throughout their lifecycles. It’s a chance to turn what is now a winding path through a dark wood into an interstate highway, complete with mileage signs, gas stations, and roadside restaurants.

Combining these organizations within a broad and potentially global ecosystem will allow us to streamline the journey from fundamental research to applied research, and from applied research to the market. It will reduce the stubbornly high failure rates of biopharmaceutical candidates, and ensure that new drugs and therapies reach the people who need them in time to make a difference.

An ecosystem of this kind, in which its members compete and collaborate to produce value for startups, will significantly lessen the risks associated with taking a biopharmaceutical to market. In the high-stakes game of biotech innovation, innovators will no longer have to worry about drawing the winning hand, because they’ll already be holding it.

 

Bart Van Praag is the CEO and founder of Dovetail Integrated Systems. Follow him on LinkedIn and Twitter.