Last Thursday, BAIA held the much awaited panel event discussion with Pitch Johnson, as moderator, in conversation with David Low, Douglas Crawford, Roberto Crea, and Napoleone Ferrara at Squire Sanders law firm in downtown San Francisco.
Sponsored by Grazia Bennett of Sotheby’s International Realty, the event was a great way to network with industry experts and learn about biotechnology: an exciting, difficult, and life-changing area of science and research. It is no surprise to us that we had a sold-out event and every guest showed us their eagerness to attend.
In synopsis, Dr. Crea and Dr. Ferrara shared their stories at Genentech (now a member of the Roche Group), in the biotech industry, and their decision to leave Italy to come to the US. Pitch Johnson, Mr. Low and Dr. Crawford explained how funding cycles and innovation capital requirements are affecting the biotech industry, and finally, how biotech companies will have to overcome both scientific challenges and compete in the international arena.
The Stories of Two Italian Scientists: Dr. Crea and Dr. Ferrara
In 1974, Dr. Crea earned a Ph.D in Biological Chemistry at the University of Pavia, Italy. In 1981, Dr. Ferrara earned a Doctor of Medicine (M.D.) from the University of Catania Medical School, Italy. In the 80s, if you asked both Dr. Crea and Dr. Ferrara what biotechnology was, they would have not been able to give you an answer: the biotech industry was just beginning, and both independently saw an opportunity to continue their passion for scientific research in the San Francisco Bay Area.
With the “right skills at the right time,” in 1978 Dr. Crea became Genentech’s first Director of the Nucleic Acid Department, and one of the four members of Genentech’s initial scientific team. In 1989 and also with the right skills, Dr. Ferrara and his team of scientists at Genentech made a groundbreaking discovery that opened doors to our understanding and treatment of cancer. Most notably, Dr. Ferrara’s research led to the successful development of Avastin (for the treatment of certain cancers) and Lucentis (for the treatment of macular degeneration disease of the eye) drugs.
The Biotech Entrepreneur: Success, Failure, and Funding
To Pitch Johnson’s surprise, the scientific panel argued that 90% of projects in Phase III fail. For industry outsiders, Phase III is the last stage of product development before registration and marketability of a product/drug. This means that research is increasingly complex, resource-intensive, and success is very hard to predict.
On the business side, entrepreneurs also face similar challenges. Mr. Low, Managing Director at Lazard and an expert in Biotech M&A, told us that, as cost of capital is high and access to capital is low, biotech start-ups are in a very difficult position to compete with mature, profitable companies. In fact, according to a recent Ernst & Young biotech report, the “20% of US companies that were most successful in raising funds garnered 82.6% of capital in 2010 — up from 78.5% the previous year. Conversely, the bottom 20% of companies raised only 0.4% of funds — down from 0.6% in 2009.”
The Future: International Partnerships and Translational Medicine
The future is exciting. Both Dr. Crea and Dr. Ferrara told us that scientific research of the past years is only “the tip of the iceberg, and many more advancements are possible.”
As Dr. Crawford pointed out, we are seeing that biotech research is becoming less vertically orientated and biotech companies are relying more on outside partners to conduct research and testing. In turn, this reliance helps lower the cost of capital for biotech firms and increasingly cooperation is on an international level.
In addition to international partnerships, the panel concluded that biotechnology will become more of a patient-centric industry with the pursuit of translational medicine (i.e. the conversion of scientific discovery into health improvement) and gene therapy.
The Future: Creative Scientists
The panel pointed out that “creative scientists” are what the biotech industry needs to innovate and create core technology for the future. BAIA readers, do you see “creative scientists” will keep coming to the Bay Area or will clusters of innovation be established abroad? In Italy?
A special thanks to our speakers: Pitch Johnson, David Low, Douglas Crawford, Roberto Crea, and Napoleone Ferrara.
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