Matthew Engel

On Oct. 25, 2009 the Fundamentals of the Bioscience Program Alumni Organization launched its official alumni website: fobip.org/alumni. The Fundamentals of the Bioscience Industry Program is a semester long collaborative course covering information critical for students to prevail in the biotechnology, pharmaceutical, and business worlds. Graduate students are able to hear and watch seasoned professionals from both start-up and established companies describe their career paths and discuss their business models. The program has an excellent reputation for producing bright, motivated students who have been extremely successful in their careers.

The target audience for the alumni website is professionals working in the biotech and pharma industries. I wanted to create a resource that would feature useful articles from alumni and guest authors with experience relevant to program graduates. One of my goals was to put a spotlight on the alumni and draw attention to the high caliber of its course instructors, graduates, and applicants. We hope to feature articles covering the the financial industry, venture capital, intellectual property, technology transfer, recruiting, and academia in relation to biotechnology. We want to provide information that will be useful to the start-up entrepreneur, industry veteran, and job seeker. Without any advertising we have had already 1,000’s of page views and hundreds of unique visitors. I am hoping that the content we generate will be a useful resource and we are aiming to add interviews and new articles approximately every 2 weeks.

I dreamed up this concept in early Summer 2009 and discussed it with Kate Posnanski, Manager of Programs at the Center for Biotechnology. With the help of many program alumni such as Jenne Relucio and Banke Fagbemi, we were able to bring the project to fruition and launch the website this Fall. I decided to use my experience creating websites use Wordpress to generate the blog format with some additional features. We have an alumni page we are trying to build on every day featuring over a dozen of our graduates.

On the techie side, I used Wordpress as my publishing platform with the Red Evo News Blue theme from Red Evolution installed. This theme evens offers a modest support forum which was able to answer some of my questions about theme customizations about controlling the length of the except. The except is the text displayed on the homepage describing the content of an article in brief. Also, I took advantage of using custom fields for the first time. Before creating this site, custom fields were a complete mystery to me. I found this video tutorial EXTREMELY helpful, and now I use the custom field to display images on the homepage for each post. There are both thumbnail and featured image custom fields available, built into the Red Evo News Blue theme. This was also the first time I embedded a Google Calendar into a website. That part was extremely simple, and if you want to know how to do that check here.

In summary, I hope to continue building this special website, which I hold dear to my heart and hope it will bring alot of benefit to the Fundamentals Program and its graduates. Cheers!

By Mathew A. Engel

Day 1 Summary: Venture Capital Financing, Intellectual Property Management, and Emerging Business Models

The 2009 Life Science Summit took place from September 23 to 24, 2009 at the Hyatt Regency Hotel in Happauge, NY. There were hundreds of attendees representing the biotech industry and academia from all over the state. The industry attendees showed a diverse segmentation with strong representation from university technology transfer offices, law firms, venture capital firms, medicine, privately held biotech companies, mid and large-cap pharmaceutical companies. As a graduate student and alumni of the Fundamentals of the Bioscience Industry Program, I spent most of my time talking with accomplished professionals from successful companies who had experience commercializing technology, raising capital, or evaluating new ventures. Below I will summarize my findings from the most interesting sessions throughout the first day of the summit. Hopefully, in the near future I will publish a follow-up covering day 2.

What Does it Take to Build a Biotechnology Company in Today’s Environment

The opening plenary session was a great way to spark the crowd’s interest and attention. In the back of my mind, I am always thinking about starting a biotechnology company and therefore always eager to hear advice from seasoned industry veterans. These individuals, especially those who volunteer as panelists or speakers are often willing to share their knowledge and offer some deep insight to beginners. In this session the speakers focused on how to raise capital. Those who are evaluating your proposal will be thinking “where is the technology” and “where is the project”. It is suggested that you network and these connections will lead you to investors who can also guide you into small collaborations. Their role is to keep these smaller companies on track. Currently, most of the demand is for products in late stage clinical trials, in this space demand remains high. Pharma is limiting their investment to certain therapeutic areas. The days of massive deal for a new platform technology are behind us. The huge investment in genomics with no products to show for it was cited. Most deals come about because someone knew someone. It’s not just writing a business plan and patents (though that is still required!). Venture capital (VC) will only stay in for a very short time. Pharma will only jump in Phase II. VC largely invests in people they know. Mailing the best business plan in the world to VCs will get you nothing. You have to meet people some way that might invest. For example, some of the people on the panels today are Angel investors. Remember to “pick your partners”. The entrepreneur better be prepared to invest. Are there other options besides start-up? Many of the panelists, knowing what they do now, would not have chosen to start their own company. “Got to be ignorant to go do it”. Today, businesses are focusing on staying extremely lean - infrastructure is reduced. Reducing the amount of money necessary to operate. However, a company can only “be so lean” and achieve their business goals. VC is not going to be the “sugar baby” that’s going to take the company all the way through. There are drug discovery and medical chemistry labs on campus. The university should have a funding pool designated for small companies coming out of academia. One of the panelists spent time describing the experience of his friend who was trying to raise capital. His friend took no as just another opportunity to go back to him. However, it’s good to get someone with more experience and put together a team of people. “Build a culture and your company”. Medical devices is a great area to get into now. Diagnostics tools is a “neat area to be going into”. Get management in - VC looks at management team. Get help and advice from VC. Donald L. Drakeman, Venture Partner at Advent Ventures had previously ran a company and was now a VC. His motto is “management, management, management”. What makes great management? Management that will step aside.

Is the VC funding Model Broken?

Mary C. Tanner, Managing Director at Peter J. Solomon & Co. and Maggie Flanagan LeFlore, Managing Director at MedImmune Venture Inc. were two of the most outspoken panelists during this business workshop. The panel delivered an overview of the VC industry covering current trends in their investment strategies. VC’s are adaptable and clever. They are in the business of building private companies to be sold. Their goal is to reach a deal with your company, in which payments are made as milestones are met. LeFlore covered 18 deals in the last year. Private companies are easier to sell. Fewer and fewer big pharma are in the market for these investments. Their has been a fundamentals shift in exit strategy. Survival has followed those most adaptable to change. There are many exit strategies. How to get the VCs interest? Early stage risk is notorious, your goal should be to find little pockets of money to move things forward. Your faculty members better be well known (i.e. published in Nature, Science, Cell..). One of the panelists, E. Jonathan Soderstrom, Managing Director of the Office of Cooperative Research at Yale University had brought a compound to the attention of Lily. They asked for a proof of concept in humans! He did not even have that in animals. The message is that you cannot expect Lily or Genetech to fund your development costs when the product is highly experimental.

National Resource Defense Council Loses Legal Battle Against US Government

The National Resource Defense Council, local state environmental advocacy groups and Native American tribes have been protesting the construction of a new $12 billion pipeline which stands to stretch from Alberta, Canada to Wisconsin, US. On August 20th, the U.S. State Department approved permits for Enbridge Energy to begin construction. The pipeline will allow for 450,000 barrels of heavy crude to be pumped from tar sands in Canada, transported, ultimately to be refined in Wisconsin, as reported by the Associated Press. Tar sands, or oil sands, are extra heavy deposits of “unconventional crude oil” stored as bitumen deposits - a substance similar to tar, or asphalt. Bitumen contains lead, arsenic, selenium, mercury and many other toxic elements. Until recently bitumen recovery had not been considered profitable to extract due to the necessary mining process. Since this material is nearly solid, harvesting this material requires heating the tar until it is nearly boiling deep underneath the earth, and then separating out the sand and water. Some of the world’s largest tar sands reserves are in Canada, which produced 44% of its oil from this source in 2007.

Affect on US Oil Consumption

As of 2000, the US was consuming 19.6 million barrels of oil per day, one quarter of the world’s consumption at an annual rate of 7.2 billion barrels. This rate of consumption is increasing by 2% annually. It is estimated that Canada contains roughly 1.7 trillion barrels of tar sands oil, and at the aforementioned rate, is enough to last the US 237 years. However, it should be noted the cost of extracting the resource is very high - both financially and environmentally. This type of oil, referred to as unconventional oil requires surface mining or other in situ techniques that require massive amount of water and energy. Therefore, the economic benefit of mining this unconventional oil source was non-existent with the relatively cheap cost of fuel until 2005. The chart below illustrates the price of light crude oil on the NYMEX from 2001 through 2009.

Here we can see that crude oil peaked at over $140/barrel in early 2008. Economists may consider the correlation of these record high costs as a precursor to the current recession seen in the US right now. It is difficult to calculate if this was an example of correlation or causation - i.e. did the record high prices of oil spur on the recession? or did a recession cause the price of oil to collapse? This link provides historical charts tracing the price of crude oil back to 1983. The massive monetary and industrial investment in tar sands oil production and transportation infrastructure is a sign of an important trend to come in the near future - the probable increase in costs of crude oil. Since Q1 09 there is a clear rise in the cost per barrel, and this trend is likely to increase, barring unpredictable political events abroad. This commitment and investment in construction could only be worthwhile if the price of crude was expected to rebound with a dramatic increase in price. At $75/barrel, the intensive energy required for tar sands oil mining is not economically profitable. The NRDC case described above was dismissed by a federal judge on procedural grounds, claiming the NRDC lacked the proper authority to challenge the pipeline’s environmental impact permit.

Future of alternative energy at stake

With all the government pledges and political talk about alternative energy investment, technology development, and job creation, the presidential approval of this project to go forward was a massive disappointment. Economists and environmentalists alike agree that the current long-term strategy of investing in oil production is a major step in the wrong direction (see Thomas Friedman Hot, Flat and Crowded). Sierra Club Executive Director Carl Pope says ”This project will lock our nation into a dirty energy infrastructure for decades to come”. “Instead of increasing our reliance on oil and piping in pollution, the State Department should support clean, American energy and the jobs that come with it.” The decision by the federal government to allow this construction and old polluting technology infrastructure to go in place is a significant blow to the alternative energy industry. Instead of supporting the research, development, and commercialization of alternative energy technologies i.e. cleantech, the federal government is tacitly approving the influx of billions of barrels of oil, the carbon monoxide that is produced as a biproduct and released into the atmosphere, not to mention the destruction of the natural environment from which this tar sands oil came from. From an economic standpoint, this project will produce jobs in the short term, but threaten a nancesent industry from burgeoning in the long term which ahs the opportunity to transform our country and our world. This project will cost American jobs that could have been created in the high-technology industry which sustains long term financial growth, opposed to short term construction projects that do not add to any new industry.

Essentially, this is a major victory for big oil sanctioned by our own government which is acting as a mouth piece for the clean energy industry while doing literally nothing to practically support it. The rise of cleantech is not an if, but when. If it not now, it will be in the future when petroleum resources are no longer economically or politically viable or people realize that burning oil for fuel is not sustainable. And if America is not a leader in this innovation, surely China and India will step up to the plate.