Catching Up: Convergence, #NEINNO, What's Next in Tech

- The sixth edition of Convergence: The Life Sciences Leaders Forum (an event I help organize) happened last week. Oddly, attendance was up from 2008. Not sure how to explain that. Featured speakers included Genzyme CEO Henri Termeer, Sirtris founder Christoph Westphal, Harvard Pilgrim CEO Charlie Baker, Beth Israel CEO Paul Levy, and cutting edge researchers David Altshuler from the Broad and David Eisenberg from Harvard. Xconomy had some coverage, as did Mass High Tech, and there was a pretty healthy stream of tweets, too.

(Termeer's appearance was followed by a great Sunday Globe story by Stephen Heuser, and then some unfortunate company news on Tuesday, as Genzyme was forced to shut down its Allston plant for decontamination.)

For the first time, we're sharing audio from the event. You can either download the MP3s for later listening, or just click play.

- Christoph Westphal / Henri Termeer session on "The Past, Present & Future of Genzyme." (MP3 file.)



- Alnylam CEO John Maraganore moderates a panel of executives from GlaxoSmithKline, Biogen Idec, Novartis, and Merck on "The New Logic of Partnerships, Licensing Deals, and Collaborations." (MP3 file.)



- Stromedix CEO Michael Gilman talks to David Altshuler of the Broad Institute and David Eisenberg of Harvard Medical School's Osher Research Center about their research. (MP3 file.)



- Jeffrey Krasner interviews Beth Israel Deaconess CEO Paul Levy and Harvard Pilgrim CEO Charlie Baker about the future of the healthcare system. (MP3 file.)

- I've been psyched to see how many people have been tweeting about New England Innovation Month using the tag #neinno. This coming week wraps things up, so do help spread the word -- and try to get out to an event. (We just added a free event called PitchPub to the calendar.)

- For my part, I'll be dropping by XSITE 2009 and EurekaFest on Wednesday and Friday, and moderating/emceeing things at What's Next in Tech on Thursday evening -- which looks like it is attracting a great group of participants (listed on the registration page all the way at the bottom.)

- I'm also adding the Social Media Breakfast series to the list of regular gatherings (at right)... although I find it impossible to figure out from their site when the next one will be held (!)

(In the photo is Genzyme CEO Henri Termeer being interviewed by Sirtris Pharmaceuticals founder Christoph Westphal, at Convergence 2009.)

Westphal on the Life Sciences Innovation Paradox

I had a chance to sit down for a few minutes with entrepreneur and ex-VC Christoph Westphal at the Biotech Business Development Conference he organized today at the Charles Hotel. Mostly, we spoke about Westphal's assessment of the current environment for life sciences in Boston.

We're in the midst, he said, of "an unusual and profound downturn" in which big companies will get smaller, and some small companies will disappear.

On the VC industry: "They haven't done a good job of returning capital over the last ten years." Why? Too much focus on what's perceived as safe: specialty pharma, "retreads," and in-licensing. When venture capitalists do well, he suggested, it's by investing in innovative stuff -- and here, as examples, he offered up three companies he has been involved in starting (Momenta, Alnylam, and Sirtris). "People do pay for disruptive technology," he said.

But the paradox of today's climate, Westphal suggests, is that while big pharma companies seem to be saying they're still willing to pay for innovation -- drugs that are truly differentiated -- there seems less willingness of the part of investors to take risks on "big vision" companies. "There's less money available, and more contingencies on taking that money," Westphal said. The hurdles to getting money are much higher today than any time in the past ten years, he believes.

But while the screen is incredibly fine right now, the few companies that can get funding will be able to attract great people, he said, encounter fewer competitors in the marketplace -- and presumably see a payday at some point down the road.

From the Biotech Business Development Conference

The packed house of attendees at today's Biotech Business Development Conference in Cambridge would seem to be a sign of the industry's health. But everyone here seems to have a long list of worries. (The event is organized by Christoph Westphal, co-founder of Sirtris Pharmaceuticals and now also an exec with GlaxoSmithKline, which acquired Sirtris last spring.)

Biotech CEOs working on new drugs are worried about FOBS: follow-on biologics. The US could soon make it legal for companies to produce generic versions of biological drugs (the biotech industry prefers to call them "biosimilars.") That could cut the profit potential of the very expensive new molecules now in development. John Maraganore, CEO of Alnylam Pharmaceuticals, said the industry needs to adopt "a science-based approach" to persuading legislators and the public that follow-on biologics ought to be tightly regulated, rigorously tested, and carefully evaluated by the FDA. In the past, Maraganore said, "we were obstructionists" about the very idea of follow-on biologics.

There's concern about new regulations that govern how biotech and pharma companies can discuss (or "detail") their products with doctors. "Detail times of 60 to 120 seconds is not much different from the UPS guy making a delivery," said David Pyott, CEO of Allergan. "The only difference is the drug rep is better paid, and sadly, better educated." Pyott predicted that drug companies will have to devote more resources to online education for physicians.

Privately-held biotech companies worry about losing negotiating leverage with bigger partners if it's perceived that they're running short on cash. Duncan Higgons of Archemix suggested that many big pharma companies have created their own lists of distressed little biotech companies, and are planning to do some "bottom-feeding" in this environment, buying them (or certain assets) at a discount. Having enough cash on hand to walk away from a deal is always a good thing, said Steve Bernitz of Concert Pharmaceuticals.

Publicly-traded companies feel like the markets aren't rewarding progress. David Meeker of Genzyme noted that the company has had three new drugs approved in the past three months, and yet the company's stock is down 30 percent.

Venture capitalists are finding it isn't so easy to raise that next fund. Jonathan Fleming of Oxford BioScience Partners told me his firm had put fund-raising "on pause" earlier this year, and described the fund-raising environment as "absolutely horrible." (But he said the firm would be out again talking to prospective limited partners "sooner rather than later.")

Investors and start-ups are worried about the focus on later-stage assets. How will new innovation be supported if everyone is focused only on getting products that are already in Phase III clinical trials across the goal line?

"There's a real failure of the capital markets to fund projects to the point where there's an ROI," said Craig Wheeler of Momenta. "If it continues, we could see real damage to the model that has supported innovation of the last twenty years."

Even Wyc Grousbeck, the Boston Celtics owner who'd previously been a healthcare investor at Highland Capital Partners, had a few problems to gripe about (despite sporting a glittery Celts' championship ring on his right hand), most notably injuries to Rajon Rondo and Kevin Garnett, two key team-members.

Splitsville for Alnylam and Merck

Cambridge-based Alnylam Pharmaceuticals and Merck had a big-money partnership -- up to $120 million in milestone payments.

As of today, it's done with, and Alnylam CEO doesn't seem too depressed, saying the split is in Alnylam's best interests.

What do you think is happening here? Is it entirely related to Merck's acquisition of Sirna Therapeutics, an Alnylam rival that is also working on RNA interference? (Merck bought Sirna for $1.1 billion last November.) IE, why does Merck need Alnylam as a partner if they now own Sirna?

Here's an old description of the Alnylam/Merck collaboration from the Alnylam Web site (since removed):

Alnylam and Merck are in a collaboration to develop RNAi therapeutics across a potentially broad spectrum of disease areas. Originally forged in 2003, the companies amended the terms of the collaboration in 2006 to provide Merck with a more active role in the development of RNAi therapeutic products, and Alnylam with an opportunity to receive accelerated R&D funding and the potential for significant milestones and royalty payments on commercialized products resulting from the collaborations.

(..and...)

Alnylam and Merck have initiated a pre-clinical program to develop RNAi therapeutics for spinal cord injury. The program is focused on the Nogo pathway, which plays a key role in preventing regeneration of nerves after injury, such as spinal cord injuries. An RNAi therapeutic that inhibits this pathway could potentially promote neuronal cell regeneration and reduce or prevent paralysis caused by such injuries.

Alnylam to explore micro-RNAs in joint venture

The New York Times reports on a new joint venture involving Cambridge's Alnylam Pharmaceuticals and ISIS Pharmaceuticals of California, which will explore the therapeutic potential of micro-RNAs. Andrew Pollack writes:

Micro-RNAs, virtually unheard of a few years ago, are tiny snippets of RNA — the chemical cousin of the genetic material DNA — that have been found to play a major role in controlling biological processes. Scientists have identified about 500 different micro-RNAs that are made by human cells, and these snippets in turn appear to influence the activity of thousands of genes.

Studies have already linked micro-RNAs to cancer, viral infections, immune disorders and other diseases. So blocking specific micro-RNAs — or perhaps stimulating them — could theoretically provide a powerful way to treat diseases.

...The new company, called Regulus Therapeutics, will be equally owned by Isis and Alnylam but will have its own management and board.

Regulus, according to the press release, will be based in Carlsbad, California.

And here's a bit of astronomical trivia: Alnilam (with an "i") is the name of the middle star in Orion's belt. Regulus is the brightest star in the constellation Leo.

Today's Globe column: 'Why biotech CEOs need to think like Steve Jobs'

Today's Globe column deals with the importance of being able to sell a big vision in life sciences -- especially when a start-up is trying to pioneer a new area of science.

Among the CEOs I mention as "poster child" communicators are several alumni of Millennium Pharmaceuticals, including John Maraganore of Alnylam, Steve Holtzman of Infinity, and Alan Crane of Tempo Pharmaceuticals. Then you've got Christoph Westphal of Sirtris, and Josh Boger of Vertex. All these guys have elements of Steve Jobs' ability to communicate something ambitious and exciting -- something that is sorely missing among tech companies in New England right now.

The video clip features Alan Crane explaining how Tempo is using nanotechnology to engineer a new kind of cancer drug.



Finally, a few quotes that didn't make it into the edited piece....

“Someone who is a great storyteller can win people over with relatively little substance,” says Michael Gilman, formerly executive vice president of research at Biogen Idec. “But other people tend to be rubbed the wrong way by it.”

“The scientist in me is never going to make assertions that I don’t think I can back up with data,” says Gilman. “That’s just the way I’m wired. If you promise too much and disappoint, it’s not good for you in the long run.” Gilman founded Stromedix, Inc. of Cambridge in 2005, licensing a product that Biogen Idec had started to develop. It’ll begin trials later this year.

“Companies undergo a brutal and challenging transition when they’re forced to be evaluated on the merits of their products,” says Steven Dickman, CEO of the consultancy CBT Advisors. Dickman worked with Alnylam in its early days...

That transition hasn't quite happened yet for all of the companies I mention in the piece; while they've got drugs in clinical trials, none are yet on the market.