This story was co-written with Editor Laura Baverman
During his first address to the Joint Session of Congress on Tuesday, which happened to coincide with Rare Disease Day, President Trump introduced Megan Crowley, a young woman who suffers from a rare genetic disorder called Pompe disease.
President Trump relayed her story to the audience: her father, desperate for a cure, founded Novazyme Pharmaceuticals, a biotech startup that developed the drug that saved her life.
President Trump went on to say:
“If we slash the restraints, not just at the FDA, but across our government, then we will be blessed with far more miracles just like Megan.”
But Megan’s story isn’t as simple as the President relayed it to be, thus duplicating its success isn’t easy. Neither is finding the right balance between profit for the biotech companies, investors and shareholders, affordability for the consumers, and continuity of R&D dollars to ensure innovation continues.
This tension between the need for regulation, the necessity of profits to sustain the industry, and the desire to expedite drugs and technology development to benefit society was palpable at the Council for Entrepreneurial Development’s 2017 Life Science Conference held this week in Raleigh.
But it wasn’t all policy and politics. Other themes emerged and important announcements were made too. Here’s an overview of the major highlights of the annual gathering of life science innovators and investors.
Implications of federal policy: Confusing, potentially detrimental
Healthcare, and subsequently biotech and pharmaceutical policy, is rapidly changing and evolving in Washington. Between the Affordable Care Act’s unknown future, the passing of the 21st Century Cures Act in late 2016, and President Trump’s back and forth on which side of the pharma/consumer debate he intends to land, a great deal of uncertainty and confusion faces the biotech industry.
Contrasting policy suggestions and positions were sprinkled throughout keynote addresses by former FDA Commissioner Rob Califf and James Greenwood, president and CEO of conference sponsor Biotechnology Innovation Organization (BIO). While Califf explained that the FDA is built to protect and advance innovation, Greenwood believes the biopharmaceutical industry is to thank for the innovation occurring, pointing to the industry’s 21.3 percent R&D reinvestment rate (reinvesting profits into R&D). That’s the highest of any industry in 2015.
Trump has vowed to “overhaul the FDA,” and all of his rumored choices to replace Califf as head of the FDA are on record stating a desire to speed up the drug approval process despite efficiencies realized in recent years through legislation like the 21st Century Cures Act .
The Act earmarks funding for medical, biotech and pharma research and streamlines the drug and medical device approval process at the FDA, among other things.
But as with most legislation, the executive agencies that will enforce the law have a good deal of influence over how it will be implemented. So until a new FDA commissioner is nominated and sworn in, the implications of the law are still not wholly known.
And of course, the ongoing debate over whether the Affordable Care Act will be repealed and how it would be replaced hangs over the industry. It affects almost every aspect of the healthcare system, including drug prices, innovation incentives and the incentive to use digital healthcare tools to improve health outcomes.
NC companies are leading in designing solutions for the toughest-to-solve diseases and problems
During his pitch, Baebies CEO Richard West shared the ways his Durham startup’s now FDA-cleared newborn screening technology can diagnose a wide range of disorders (including Pompe disease) at birth, saving young lives and leading to better outcomes.
And viable treatments for Orphan Diseases—those that affect fewer than 200,000 people nationwide like Cystic Fibrosis or Tourette’s syndrome—are increasing. While funding for this research has been available since the 1983 Orphan Drug Act, progress has accelerated in recent years.
More innovation is coming from North Carolina too. A new partnership between Pfizer and the North Carolina Biotech Center, announced at the conference, will ensure there’s a talent pipeline of gene therapy experts in the state.
Pfizer saw the region’s potential to advance gene therapies after acquiring local innovator Bamboo Therapeutics last year, and wanted to assist the state in developing talent to continue the work. So Bamboo introduced Pfizer to executives from the Biotech Center and a new $4 million partnership was born.
Bamboo Therapeutics co-founder R. Jude Samulski and the Biotech Center’s president and CEO Doug Edgeton were on hand to announce the partnership that will create a multi-year academic fellowship program to NC’s universities.
Look out for the Venture Capital Multiplier Fund
Created by mandate from the North Carolina legislature, this new $60 million fund, managed by Hatteras Venture Partners, will provide fuel to early stage investments in the state. The fund will invest alongside existing angel networks and funds in companies headquartered or with significant operations in the state or to commercialize intellectual property at universities. It will also be used as a tool to recruit innovative companies to locate in North Carolina.
According to fund manager Charles Merritt, the VCMF is meant to expand access to capital for these “North Carolina nexus companies”.
More national connections coming
Former CED president and CEO Joan Siefert Rose announced a new title in timing with the conference. Besides her role as a consultant Creo, she’s now CEO of a new national organization called LaunchBio.
With headquarters in San Diego and a presence so far in San Francisco and Boston, its goal is to help life science companies across the nation commercialize more quickly by connecting them with various resources.
Siefert Rose expects to collaborate locally since she’ll remain based here. Likely partners include CED, the NC Biotech Center and the NC Biosciences Organization.
Another local connection? BioLabs, the life science coworking space opening later this year in downtown Durham’s Chesterfield building. The Boston-based chain of spaces and wet labs provided LaunchBio’s initial funding.
Corporate investments to continue, accelerate
A panel of leaders from the strategic investment funds affiliated with Eli Lilly, Illumina and Johnson & Johnson seemed to agree that a good deal of innovation continues to happen outside of their corporate research facilities and they’ll continue to either invest in or acquire it.
2016 data around global corporate venture capital is a bit more sketchy. According to CB Insights, global corporate deal flow fell a bit for the year, but dropped off 21 percent in the fourth quarter. U.S. corporate venture capital activity fell 12 percent from 2015.
Note, that’s after a record year of activity in 2015. And corporate venture capital still makes up a larger percentage of deals than previously—21 percent of all deals include at least one corporate investor.
The panel’s investors said acquisition targets cover a range of industries and research, from genomics broadly to diagnostic tools to therapeutic development to data analytics.
Tech is important to corporate biotech investors too.
Robotics, AI, machine learning, bioinformatics and data analytics were hot topics for a panel of investors from the Johnson & Johnson Innovation Center, Merck, Bayer CropScience and LabCorp.
While all say they’re in search of innovation specific to their industry, it’s the technologies that make their work more effective, quick or relevant that are big areas of interest.
Panelists are in search of technology that helps them perform clinical trials quicker and more effectively or to quickly compute and analyze huge amounts of data. LabCorp wants to allow patients to take various tests at home or at a doctor’s office. J&J needs cost effective and precise 3-D printing technology for implants and prosthetics. And Bayer needs robots capable of delivering pesticides to individual weeds in a field.
IP law changes hurting innovation/company formation
We learned from a pair of attorneys at NK Patent Law that a bunch of recent case law is making it difficult for AgTech, device, diagnostic and software companies to secure intellectual property for their inventions.
The issue comes down to whether natural products like a newly discovered molecule or type of bacteria or innovations that fall in the nebulous category of “abstract ideas” can be patented. The Supreme Court started the tailspin with a case called Alice Corp. vs. CLS Bankings Intl. in 2014, and subsequent federal court rulings have set some very murky precedent since.
The result has been big increases in patent application rejections. The full impact is yet to be determined, the lawyers said. But more and more of their clients are talking about it.
How do we create more funds like Pappas in NC?
With just about $500M under management and 70 portfolio companies, Life Science Award winner Art Pappas has quite a legacy in North Carolina and in his industry. He’s participated in some of the largest exits in the pharma industry, contributing drugs that treat sleep disorders, migraines, chronic pain, autoimmune diseases and cancer, which begs the questions.
Who are the next generation of award winners, and what can the state do to attract more funds like his?
Biggest opportunity for R&D and company formation? Alzheimer’s
Dr. Murali Doraiswamy, a professor of psychiatry and behavioral sciences at Duke University, closed out the conference with an engaging presentation on the history of Alzheimer’s disease, the magnitude of its threat to public health and the promising research and treatments underway. Much of that work is happening at the Duke Institute of Brain Sciences and at companies within North Carolina.
Here’s another angle we took from the talk.
Alzheimer’s research is worth investing in and building companies around, not just to find a cure, but to ensure the quarter of us likely to get it can continue innovating and building companies for years to come.