How incubators are accelerating early drug development
Long dubbed the 'valley of death,' the transition between academic discoveries and drugs entering the pharma pipeline is often a place where good ideas go to die. Many academic scientists struggle to transform their research into viable compounds that pharma companies want to fund and eventually bring to market. While getting these compounds to a place where pharma might be interested has traditionally been the role of biotechs, just as many good drugs never reach patients because scientists often lack the business know-how to run a company.
We have gotten to a point where big pharmas, venture capitalists and even government are working together to help bridge this valley and accelerate early drug development. But that wasn't always the case.
If you rewind about five to seven years, you will remember big pharma facing the crisis of the patent cliff. Virtually all the major primary care blockbusters were set to go off patent, leaving many companies facing billions of dollars in generic competition. This left the behemoth pharma companies scrambling to find innovative new medicines to fill their pipelines.
Many realized that this innovation would not come from within and started tapping biotechs, but even those resources started to dwindle as competition got more intense. Meanwhile, biotech companies were experiencing a glut of funding from venture capitalists. This extra cash in the space allowed them to develop their own drugs longer and even opt out of seeking takeovers from pharma as an exit.
Ultimately, this led to pharma seeking new ways to tap into the innovation engine earlier, often as early as the academic research level. Master agreements between scientific centers and pharma companies began to crop up all over the place, but still, this left the problem of transitioning those discoveries into drugs that pharma would be ready to develop.
Enter the incubator
In the last five years, a number of publicly and privately funded spaces have emerged to provide scientists with the help they need to bring their research from bench to bedside.
All of these incubators look a little different. Pfizer established its Centers for Therapeutic Innovation (CTI) in 2010, beginning with a pledge of $85 million over five years in an agreement with the University of California, San Francisco (UCSF). It now extends to nearly 25 academic and medical institutions, as well as to a tie-up with the National Institutes of Health (NIH), and stretches across several geographic locations including New York; San Francisco; Boston; San Diego; Dublin, Ireland; Melbourne, Australia; Bethesda, MD and South Korea. There are currently about 25-30 project ongoing with about 180 people from within Pfizer supporting the efforts.
"We'll consider successful when there are drugs on the market," said Tony Coyle, chief scientific officer at CTI, in an interview with BioPharma Dive, "but until that happens — well, in the sense of building a reputation, building a model, building partnerships and be being able to build the right framework with the right scientists, in that sense we are a success."
The CTI program helps Pfizer tap into the science that is happening outside the company and has allowed the company to cultivate assets that it's not quite ready to bring into the pipeline. Coyle said the CTI program expects to have five to six molecules in the clinic by the end of 2017.
Unlike many of the other incubators that are out there, Pfizer's CTI jointly owns the projects until they enter the clinic and generate proof-of-concept. At that time, Pfizer has first right of refusal to take over development and bring the drug into the main pipeline.
Coyle noted that about 30% of projects get removed from the program in the first 12 to 18 months because they aren't working or don't align with the greater Pfizer portfolio.
"[The CTI program] allows us to be part of shaping the drug discovery process and allows us to explore the science with a modest investment," added Coyle.
Pfizer's program was one of the first by a big pharma and has served as a model for many other pharmas trying to enter the space, including Johnson & Johnson and Bayer.
A slightly different approach
Part of Johnson & Johnson's Innovation Centers, JLABS is celebrating its fifth anniversary in January. The program started with some extra space at the J&J Innovation facility in San Diego that the company rented out to a smaller biotech, but has now expanded to six locations across North America and includes more than 140 companies.
"The idea wasn't just self-serving from the perspective of wanting to get access, being able to see what is going on and having an eye on the exciting innovations that are happening, but we really wanted to help build the ecosystem," Lesley Stolz, head of JLABS California, said in an interview with BioPharma Dive.
JLABS not only provides physical space to small biotechs, but provides programs that promote community and education for residents on things like how to get their message out or how to deal with regulators. The incubator also brings in funders like venture capitalists, government agencies and advocacy groups to give the companies exposure.
Unlike Pfizer, JLABS takes a no-strings-attached approach to its incubator.
"For healthcare companies, as opposed to tech companies, it is very resource-intensive to build a startup. You need access to specialized space and specialized equipment," Stolz said.
"The way that we looked at it, it's such high risk for these entrepreneurs. And to start a startup and raise some seed money or some angel money and just try to get enough together so they can enter into an incubator and have a little place to do their work in order to build value in that company so that they then can raise more money at a higher valuation," explained Stolz.
"What we said was that is already hard enough. We don't want to dilute those people any more than they already have had to do. So, we don't want to take your equity," she added.
Bayer, like J&J, didn't limit its U.S. Science Hubs to just academic scientists, but extended them to small biotech entrepreneurs as well. Chris Haskell, head of the Mission Bay campus in California that hosts its U.S. CoLaborator, said in an interview that the goals have stayed the same, but the model has changed slightly since its inception in January 2012.
"At the time, Bayer was recognizing that we needed to expand our activities in engaging with external innovation and we had a number of programs that we were rolling out. The CoLaborator was just one approach we were taking to access external innovation," he said.
"The typical interaction [between pharma and a small company] is that you meet them at a partnering event or a mixer, find out what they're doing. You discuss their science. You decide it's early, but interesting," said Haskell of previous interactions with biotechs. "You meet a year later and find it's still early, but interesting and then you meet six months later and find they've done a deal with someone else. It's really hard to interact with early companies at the right time where you need it in your organization and it’s the right stage to have an impact."
Haskell admits that the CoLaborator has been a greater success than Bayer had expected and has built a level of trust with the companies that occupy the space. Currently, the CoLaborator rents by the bench and has 6,000 square feet, with five companies of varying sizes occupying the space.
"We haven't had anyone move out yet. That's not the original model. We thought some companies would fail and some would grow to the point where they want to move on, but it's so difficult to find space in Mission Bay that everyone is reluctant to move on," said Haskell,.
Not yet announced, the CoLaborator will be expanding into "a Phase 2 of sorts," says Haskell. The incubator expects to be expanding into a "significantly larger" space in early 2017. Current residents are expected to take up more space and new residents will be brought in. One of the new residents will be Bayer's joint venture with CRISPR Therapeutics, Casebia, which was launched earlier this year.
Mary Ludlow, CEO of Cairn Biosciences, says Bayer has been "a friendly landlord." Her company joined the CoLaborator in December 2013 and started out with herself and a research associate. "We started out with just a bench and desk," she said. The company has now grown to five people and double the space. She expects Cairn will continue to grow and is excited to remain part of the CoLaborator.
Ludlow, who admits she had no business experience, says the CoLaborator allowed Cairn to hit the ground running.
"It gave us the benefit of being able to pick up speed very rapidly. [After moving in,] we were able to start experiments the next week. There was equipment ready and waiting for us and cell cultures up and running. Had we moved into our own space, it would’ve been months before we could have gotten experiments going," she said.
There have been other benefits as well — it has allowed the company to cut down "on administrative tasks," manage costs, and directly interface with the broader Bayer organization. Ludlow revealed that Cairn has recently signed a research collaboration with Bayer. She notes that Haskell and his team "brokered the interaction" and made sure that executives and scientists in Berlin took notice.
"It would’ve been a much more painful process that could've failed at any stage had it not been for the help and the interaction with the CoLaborator," said Ludlow.
Big pharma aren't the only ones getting in on the incubator action. Private and publicly funded spaces have begun to pop up all over the country — especially in hotbeds like Boston and San Francisco.
For example, Massachusetts Life Sciences Center is a $1 billion, state-funded initiative to support and grow the life sciences ecosystem in Massachusetts, said Travis McCready, president and CEO of the Center.
Others are cropping up as well. The Accelerator has been a Seattle staple for more than a decade, but recently expanded into New York City. Meanwhile, Harvard University recently opened the doors to Harvard Life Labs, an incubator for biotechs that has sprung up from the university's own labs.
All of these incubators provide scientists from academia and small start-up biotechs the space to work in highly-sought after geographic areas that they wouldn't necessarily be able to afford, and give them resources, equipment, education and access that they wouldn't have in other settings. Meanwhile, it provides pharma an easy way to tap into the innovation engine without forking over a massive investment.
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