Blog | July 6, 2015

BIO 2015 — A Big Tent Can Be Hard on the Feet

Source: Life Science Leader
wayne koberstein

By Wayne Koberstein, Executive Editor, Life Science Leader magazine
Follow Me On Twitter @WayneKoberstein

bio 2015 - biotech, biotechnology

What is biotechnology? A manufacturing machine? A business model? An industry built on manipulating life itself for medical and other purposes?

Wait. What?

I kept startling myself with such thoughts on those long, long walks down the great hallway of the Pennsylvania Convention Center, a name that suggests its general shape. On and above the second level, the Center stretches lengthwise across several city blocks. On the first morning, a young registration aide sent me to the media room, on the opposite end of the building from where we stood, to get my badge. Wrong. Once there, the media greeter told me I must turn around and go back whence I came, all the way back to where I had spoken to the aide, not 30 feet from the actual badge-giving table for media. You see how important good information is to the proper operation of any enterprise?

“This place is like a giant tent,” I thought. The conference sessions take place on the street level; the exhibition takes up most of level two. At the Biotechnology Industry Organization (BIO) International Convention this year, the conference content mainly addressed BIO’s original origins on the medical side. Only in the exhibition would you see the full breadth of biomedical, industrial, agricultural, and overall economic-development applications of biotech. It requires a good hour to walk the entire floor, or more, unless you mostly window-shop and keep your conversations short.

By the strictest definition of biotechnology, all of the three main biotech industry sectors are one and the same. The makers of biomedicines, industrial bioproducts, and biofoods all employ forms of genetic engineering in their production processes. But by a more liberal, evolving definition of biotech, those sectors might as well be entirely different worlds, varying vastly in scale, business modes, markets, and development paths. They are certainly different industries by any normal meaning of the term, “industry.” Yet BIO, years ago, purposefully merged all three “biotechs” under its big tent roof, where they rub shoulders but never quite congeal.

You wait, though; I will surely hear from someone who tells me I’m wrong in my previous statement — that, at very meaningful levels, the various biotech sectors do in fact congeal. In some basic, academic science, they are indistinguishable. And in scale-up and production, the three areas may well have good things to teach each other. Thus, in technological matters, it might be more useful to emphasize their differences; in business, their similarities. In the medical space, “biotech” has also become an ever more inclusive term, referring more to an enterprise business model evolving in the healthcare market than to the use of recombinant DNA technology to make therapeutic proteins. My background in pharmaceuticals no doubt tips me toward the business end, skewing my perspective.


Thus ran the musings on my first morning at BIO. It was Monday, and many people had not yet arrived. But it was a day for interviews. I spoke with a company developing a peptide drug to prevent the kind of kidney injury that commonly occurs in surgery, another company with an early stage RSV vaccine from its “mucosal” platform, and another with eight compounds that cross the blood-brain barrier in early development for neurodegenerative diseases. I did not report on the companies from the convention, or on any others I interviewed there. Instead, I will keep my eye on most of them for a while and may cover them down the line in Companies to Watch, The Enterprisers, or other writings for Life Science Leader.

After the Monday interviews, I spent some time in the exhibition area, which was still in set-up mode for the opening the next day. Forklifts dodged around workers covering booth frames, hoisting signs, unwrapping furniture, or sometimes sitting quietly completing paperwork in this little city of exhibits. But the big doors were wide open to the hot, muggy day outside, and the air conditioning seemed absent or ineffective, so my reverie among the booth builders did not last long.

Many of the folks I met on Monday had, like me, arrived in Philadelphia from the West Coast the night before, and we all commiserated about the long flights, the city’s heat and humidity, and the jet lag exaggerated by our early risings. I was awake at 4:00 AM, and after walking the two blocks from my hotel, came into the Center soon after it opened, my hair and clothes moist with the universal sap of human toil, our common biological reaction to mild exertion in sultry conditions.

I describe all this not to put a painful twist on my account of the BIO event, but to show what people will endure to get there. It is worth it — any and all of the struggles you must go through — just to be in this incredible, international confab of some 15,000 people, where even the most casual, random meeting may bring huge rewards, or maybe just the small nudge of encouragement you need at the moment. In the predictable but high-spirited plenaries, in the “BIO Buzz Zones” near food and coffee, and in the many alcoves and lobbies along the great hallway, I found the day offered plenty of the event’s primary ingredient: face-to-face conversation.


With a major interview scheduled for late in the day, along with my promise to move the appointment anywhere else in the day if needed, I spent most of Tuesday attending BIO’s conference sessions.

As is obvious in my first Tuesday tweet, I was not immediately enthralled with the program I chose to attend, a session on translational research, or collaboration of academia and industry in drug discovery and development: “Trans research #BIO2015: Sorry, so far, this one trolling mostly old ground: balancing creativity, entrepreneurialism in new scientists.” Rather than stimulating new thinking, the session forced me to recall the innate difficulty of ensuring any given speaker panel will infuse new ideas into a discussion rather than merely repeat phrases, terms, and concepts everyone has heard countless times before.

One factoid stuck with me, however: Although the unique U.S. industry/academia/government partnership in medical research has never been more critical to innovation, public funding of universities and academic research has fallen to a record low. More conditional funding for academia, coming directly from industry, has meanwhile brought some relief. But the decline in support for unfettered, pre-application research continues, feet of clay upon the sandy shores.

The next program, a “Super Session” on patient access to medicines, was designed to support industry pricing practices. The panel all, in one way or another, preached to the choir. A doctor from the American Enterprise Institute, the sympathetic head of a patient advocacy group, a medical ethicist, and a biotech CEO varied in their definition of access but agreed on the need for physicians, patients, and payers to look at prices as expressions of value — even if, in some panelists’ opinion, the “value” would sometimes go beyond most people’s purchasing power.

The panel might have done well with a bit more balance, or at least someone to say, “Without payers to pay, premium prices would just go away.” In other words, the premium-price model is not built on a market of a few ultra-wealthy patients, but on health insurance for the masses. Those same masses, by the way, will simultaneously, paradoxically, but in their own clear interest, resist high prices and insist on access to high-priced, innovative medicines, devices, and diagnostics.

“M&A and Capital Allocation: Everything Old is New Again,” the following session, came as a nice surprise. Company executives gave a candid view of how hostile acquisitions can be disruptive to innovation, and not in a good way. The balance was built in; chief executives can hardly refuse homage to M&As in general, when they may be selling one to shareholders any day. But the only missing player on this panel was the one that has made M&A its sole core strategy — Valeant.

Still, it would be hard for anyone to argue hostile M&A rewards or motivates innovation. Entrepreneurs, even of the hired-gun variety, tend to take their platforms and portfolios personally and resent anyone who would come along and pull the rug out from under them. You’ve just signed the Magna Carta and here comes Attila the Hun over the hill. Or something like that…

No, no, I’ve got it — there’s a chicken, and there’s an egg, so which comes first? Didn’t see that coming, did you? I’m being supercilious because I can’t help seeing the whole proposition as infantile. No, you can’t merge your way into innovation, of your own, but you can approximate being innovative by perpetual acquisition, betting on an industry that won’t let you run out of assets to acquire. Someone seems to have found an ecological niche, a rather self-limiting one, of course, like a very exclusive club with very few members. So, watch out, little swimmers, the river now has crocodiles.


With the big Tuesday interview out of the way and no other meetings scheduled until Thursday, I devoted Wednesday to sessions, including our own, “Strategically Financing Your Biotech,” organized by chief editor Rob Wright. Dennis Purcell of Aisling Capital led a panel of investors in a wide-ranging discussion of trends in life science venture capital, IPOs, and other areas of financing in the recent past, present, and immediate future, to be reported in an upcoming issue of Life Science Leader. (See also Dennis Purcell Building On Last Year's Biotech Boom In 2014, The Art Of Optimizing Small Biotech Market Caps – From Scientific Dreams To Strategic Reality, and The Art Of Optimizing Small Biotech Market Caps – From Scientific Dreams To Strategic Reality)

Speaking of crocodiles, in medical terms they come in miniature — in fact, microscopic. One of the other sessions I attended Wednesday was about creating investment incentives to support R&D for overcoming drug resistance in microbial evolution. A former officer at the CDC, Steven Solomon, claimed we are at the beginning of the “post-antibiotic era.” Pointing out that underfunding of research has plagued the antibiotic field from the start, Solomon advocated a mobilization of public support for new research in the United States to understand and combat antimicrobial resistance, largely coordinated by the NIH. He, and to a greater extent others on the panel, advocated tax and other incentives for private investment in new antibiotic drug development, along with more education or controls to curtail misuse that leads to drug resistance.

It seems the largest disease threats in the world do not constitute a big enough market to attract commercial-driven investment, even when the medicines to treat those threats are extensively overused. Not that long ago, developing new antibiotics was considered one of the sacred duties of an integrated pharmaceutical company — one the industry has now largely abandoned at a cost to its reputation and public image, as well as to public health.

I was attracted to the topic of one session, “Design for Value: Clinical Development Programs that Address Market Access Challenges,” because I thought it might offer more practical views of the price/value challenge. It did, although the three panelists all more or less shared the common thesis that market solutions would ensure market access. Two health economists, one from the U. of Chicago, flanked a “global value lead” executive from Halozyme, in a mostly pragmatic discussion of how companies can draw evidence of a new drug’s “value” from carefully designed clinical trials.

The bottom-line issue, however, was the possible impact of healthcare “risk-sharing” if it becomes part of the drug-pricing equation — in other words, if prices are somehow indexed to how well the medicines work in patients. Economists don’t seem to like the risk-sharing proposition; too messy, perhaps, with its potential for subjective patient input and variable disease factors such as co-morbidities. The Halozyme executive seemed more sanguine, as if risk-sharing were just another payer demand to be dealt with and dismissed. He emphasized the importance of anticipating future payer conditions in clinical trial designs. Comparisons with possible competitors, use of new biomarkers, and accounting of incidental costs, including product wastage, are emerging areas of interest for payers.

Well, I can see I’ve gone long with this blog. No matter how much I write, I can only capture a fraction of the information and experience gained at BIO 2015. The return trip was a thundering echo of the one to Phillie. I left Thursday evening on a flight to Seattle that boarded on time but then sat while the ground crew off-loaded, recounted, and re-loaded all of the checked baggage. Then we joined the back of a “very long line” of planes on the tarmac and finally took off an hour late. I had 90 minutes to make my connection in Seattle so I didn’t worry too much, but about a half-hour before landing time, we were diverted to Spokane because of a medical emergency on board. Once we finally made it to Seattle, I spent the night there and caught an early plane home the next morning. As any traveler knows, the return to home base always makes the hardships of the road worthwhile.