Insider tales from the biotech front
A biotech veteran says the industry can be fickle, but he advises the state to keep pursuing it.
By KRIS HUNDLEY
Published September 8, 2006
TAMPA - With Florida in full-burn biotech fever - spending nearly $1-billion over the past three years to recruit high-profile California research institutes to the state - an industry veteran reminded an audience here Thursday that the business is not for the meek. And the rewards may be a long time coming.
Speaking at H. Lee Moffitt Cancer Center & Research Institute's seminar on "The Business of Biotech," Steven Gillis, an immunologist who has built and sold two biotech companies over the past 26 years, showed his scars. Gillis, now a partner with the Seattle headquarters of ARCH Venture Partners, started his first company, Immunex Corp., in 1980, when investors were throwing tons of money at the sector. In 1994, when he started his second company, Corixa, investor sentiment was at an all-time low.
But Gillis, who has the ability to deliver devastating news with deadpan humor, survived - and became wealthy - by believing in the science. "Biotech is founded on the backbone of excellent science leading to breakthrough products," he said. In Gillis' case, the science paid off handily, but not without teaching him a few lessons along the way.
Among those lessons:
* When Immunex won FDA approval for Leukine, a drug that prevents infection related to certain types of cancer therapy, it wasted millions of dollars on manufacturing and marketing, ignoring a powerful competitor, Neupogen. Neupogen held its 20-to-1 lead and Immunex found itself with enough Leukine to fill a lake.
* Immunex's next product, Enbrel, failed in clinical trials involving septic shock. "The more we gave, the more people died," Gillis said. "It was absolutely horrific." But Enbrel turned out to be extremely effective on rhematoid arthritis and today it accounts for about half of that $6-billion market.
Gillis said it could have dominated the market but for one major mistake: Immunex failed to invest early enough in manufacturing Enbrel, allowing competitors time to catch up.
* Building his next company, Corixa, through acquisitions, Gillis learned the importance of quickly taking charge and firing naysayers. "There's no such thing as a merger," he said. "You don't coddle the acquired. Eliminate employees, don't try to rehabilitate."
* Though Corixa brought an effective cancer drug, Bexxar, to market, it was never able to gain market share over competitor Rituxan despite superior clinical results. Gillis said he finally figured out that oncologists made more money on Rituxan than Bexxar, which required less frequent administration.
"When making a product," Gillis told his audience of nearly 300, including many Moffitt researchers and physicians, "you have to ask yourself first, 'Is there a need for it?' And second, 'Is someone going to make money giving my product?' "
Despite the stumbling, Immunex was sold to Amgen in 1994 for $14-million. Corixa was acquired by GlaxoSmith Kline in 2005 for $300-million. And today Gillis is on the outside, helping ARCH fund seed and early-stage biotech companies.
ARCH, which manages six funds totaling more than $1-billion, has invested in more than 110 companies over the past 20 years. And Gillis clearly prides himself on betting on some "wild" technologies, like one that puts pigs in a state of suspended animation. Today, few investors are willing to take risks on such technologies that are a long way from commercialization, Gillis said.
"For many investors, science is unfundable," he said. "If that trend continues, the future will be dismal."
That may be one reason Gillis welcomed, with certain caveats, Florida's bioscience efforts. Since 2003, the state has promised nearly $1-billion in state and local funds to recruit Scripps Research Institute to Jupiter, Burnham Research Institute to Orlando and Torrey Pines Institute for Molecular Research to Port St. Lucie.
"If the state thinks it's going to reap 10 times its investment in three years, then it's probably wrong," Gillis said. "But I think it will lead to increased research activity and more companies founded in Florida, paying taxes and building buildings. I think it's a great investment."
Kris Hundley can be reached at firstname.lastname@example.org or (727) 892-2996.