Friday, May 14, 2010

Virtually Everything

I just got back from a conference on “Optimizing Early-Stage Drug Development” sponsored by Cooley and Talaris Advisors. John Hession was his customary jocular, professional self as emcee. Well organized, well attended. The only issue was that the landlord at 500 Boylston seems to think that it’s OK to shut off the AC at 6:00. What? Do they think lawyers don’t work past 6? Well, I guess that wasn’t the only problem. The presenters all went over their alloted time, and combined with the rising temperature in the room, it put pressure on everyone to get out and get back to the wine and cheese. Thus, nobody was in the mood for asking any questions. Which was good, since everyone went so far over that they completely consumed the Q&A time, not to mention half of the networking time. I did have one burning question, though.
In any case, it was an interesting group and presentation:
  • VC Perspective: Doug Onsi, Venture Partner, (HCV), Derek Lee, Chief Financial and Corporate Development Officer, Talaris Advisors
  • Big Pharma Incubator: Wing Delatorre, MD, Head of Business Development, Biogen Idec Innovation Incubator
  • Pre-clinical: Steven Richter, PhD, President and Scientific Director, Microtest World Class Life Sciences Services (streamlined non-clinical models)
  • Pre-IND to Phase 2: Mark Hurtt, MD, Chief Medical Officer, Talaris Advisors (drug development efficiency)
  • CMO Perspective: Patti Seymour, Senior Consultant, BioProcess Technology Consultants (innovations in contract manufacturing out-sourcing)
  • IP Risks: Erich Veitenheimer, Partner, Patent Intellectual Property, Cooley, LLP 
Doug told us that the VC model is broken (despite yesterday’s Xconomy article to the contrary), and that the HCV investment thesis (as virtual as possible, ≤$15M to get to POC in 2 – 5 years, strong IP and products that Pharma wants) is the way to go. Wing told us that you want to be in her incubator because it reduces costs. Steve, Mark and Patti all made cases why an entrepreneur with a molecule should use their services to develop it into a product and manufacture it, and Erich told us to hire Cooley to do your IP work. Virtually everything is virtualized. (Doug even told us about an HCV investment with only one FTE!)

So what was my burning question? Well let’s assume that Doug is right and I can get some money put together for my drug. Then I go out and hire all these service providers and contract out all the work. What’s left for me to do? My job becomes the General Contractor on a construction project managing all the subs. We even heard from Patti that it can take as many company FTEs to manage the contractors as it does to do it yourself. So if we completely virtualize a development project, I wonder if it would end up costing more than just putting a reasonably sized company together. And wasn’t that the point of putting these companies together in the first place? That you could tap into the multiple expertises of the team? The old VC mantra – I’d rather fund an A team with a B idea than a B team with an A idea – seems to be turned on its head. The “team” is the list of contractors. As an investor, I’d be very concerned that they didn’t share my passion for success.

John promised more events this summer. If they’re as thought provoking as this one, I’m looking forward to them.

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