Whenever a company changes its name and goes through a complete rebrand, there’s always an interesting backstory filled with numerous business decisions and, on occasion, some drama. As such, the leaders of these companies are usually less willing to talk about their past, wanting instead to focus only on espousing the positivity of their future direction, strategy, and mission. Luckily for Life Science Leader subscribers, Pamela Contag, Ph.D., believes we can all learn from the past.
In 2006, Contag cofounded ConcentRx (pronounced concen-tricks), but the biopharma rebranded in 2016 to become BioEclipse Therapeutics. When asked about the details of what transpired between those 10 years, Contag was extremely transparent, sharing not only her frustrations but the wisdom she earned throughout this unusual business journey.
COFOUNDING TWO COMPANIES
Following the completion of a Ph.D. in microbiology and immunology at the University of Minnesota, Contag spent the next three years completing a postdoc at Stanford University’s school of medicine. Here she did a deep dive into infectious diseases and innate immunity, and it was this postdoctoral work that led her to cofound her first company in the early 1990s, Xenogen. “That technology was biophotonic imaging [i.e., light-producing genes] that was a tool to image noninvasively in an animal model of disease,” she explains. Though the cofounders initially thought the technology would be used for diagnostics, Contag quickly decided it better suited for drug discovery and development. “You could put a gene in any pathway or any cell and track that cell and track that pathway in the presence and absence of a therapeutic, and that would tell you something about the MOA [mechanism of action],” she explains. Over the next 11 to 12 years, Xenogen’s technology was installed at nearly every university and pharmaceutical company. Along the way, Contag served as Xenogen’s president and co-CEO, taking the company public on the Nasdaq in the summer of 2004. Xenogen soon had one of the highest reported organic growth rates (i.e., roughly 30 percent) of public companies in the life sciences industry, which led to it being acquired by Caliper Life Sciences for $110 million in February 2006. Today, the technology developed by Contag resides within PerkinElmer, which acquired Caliper in 2011.
During and following the acquisition of Xenogen, Contag kept busy. She was starting Cobalt Technologies as president and CEO (2006–08) while also serving as VP of new technologies and ventures at Caliper (2006–07). Meanwhile, her fellow Xenogen cofounders remained in academia. But Contag had been bitten by the entrepreneurial bug, so when her former cofounders approached her with an opportunity, she was all ears. “They planned to put an oncolytic virus in an immune cell and introduce that into an animal model of cancer to see if the immune cell could deliver the oncolytic virus to the tumor cell,” Contag explains. When they brought their data to Contag to get her opinion, the experience was very similar to what had happened with Xenogen. “We were looking at the camera images of disease models, and suddenly we see something that’s so amazing we couldn’t even believe it!” she exclaims. She told them how she’d been inside many pharmaceutical companies talking about cancer with the Xenogen technology, and during all those visits she had never seen data this good. There was just one small problem: The technology they were working with wasn’t patented.
A PROLONGED PATENT PROCESS
Contag thought it made sense to proactively found a company around their technology while awaiting a patent for such technology. Thus, ConcentRx was born. But without a patent, it was not feasible to raise money for the company. So Contag continued to keep her eye on the ConcentRx data while waiting to hear about a patent from the university, as that was where the technology resided. Occasionally, she would even contact some VCs, but without a patent (Stanford University was in control of the patent process) they explained she couldn’t do much. Finally, in 2012, Stanford decided it was not going to prosecute the patent because it had become very difficult to do so, as all claims had been invalidated. The university would have had to start from scratch — a path it wasn’t interested in pursuing.
There were a lot of issues encountered as ConcentRx tried to move forward, and earlier interested investors had moved on to different things. Contag ruminated on what to do and eventually decided to speak with the powers that be at the university. “I asked if I could take the technology outside, and with personal funding, see if I could get a patent.” If successful, she’d license the technology from Stanford. However, she wasn’t going to pay for an option on a technology that had no claims. Having had a good working relationship with Stanford’s office of technology licensing (OTL) from her Xenogen days, they were able to strike a bargain.
Interest in immuno-oncology (IO) was just starting, and there was a general understanding that CAR-T wasn’t going to touch solid tumors. “Our technology attacks solid tumors, and we’ve been able to demonstrate a durable immune response,” she explains. “How could I not take that into patients?”
Contag finally got the first patent with the claims she believed necessary in 2015. From there they filed a continuation, got a second patent, filed another continuation, and are now waiting to hear on a third patent. “Once I had the first patent, that’s when I decided it was time to start raising money and awareness around this new generation of IO therapeutics that are not CAR-T or checkpoint inhibitors.”
Her first step was to raise enough money to help figure out what they wanted to do in terms of an IND. “There are decisions that have to be made about what the design is going to be, what the indication is going to be, how to put more data together, and how to get, for example, the oncolytic virus manufactured,” she elaborates. “Once we had all those answers, we knew it was time to rebrand the company.”
CREATING A BOARD THAT COULD HELP THE COMPANY PROGRESS
As ConcentRx had essentially been a patent placeholder, it didn’t have a board, and other than Contag, it didn’t have any employees. The original cofounders from Stanford, given the protracted patent process, had pretty much moved on to other endeavors. So Contag set out to build ConcentRx in 2015 as an actual company, anticipating that it would soon undergo a rebrand (i.e., BioEclipse Therapeutics). “There were two main challenges, raising money and changing people’s minds,” she begins. “To do that, you need data, expertise, and supporters.” So first on the agenda was to find people who would be independent board directors who could help guide her through the process. Check out who she was able to land:
Catherine Sohn, Pharm. D., board chairman, is a pharmacist, global biopharmaceutical executive, adjunct professor, and certified licensing professional, with extensive expertise in domestic and global business development, strategy and product marketing/launch execution across vaccines, pharmaceutical products and consumer healthcare brands.
Gregory Schiffman, MBA CPA, board member, is a senior finance executive with more than 25 years of strategic and operational finance, treasury, corporate development, manufacturing, and logistics experience.
Mark Frohlich, M.D., board member, is an experienced biotechnology executive and medical oncologist who has been involved in the development of cellular immunotherapies for cancer for 20 years.
“These three people sit on my board as independent directors and joined knowing we were going to bring in venture investors who would also have a seat,” says Contag. She adds that one of the real advantages of having independent directors is that they’re not focused on the timeline to the best economic outcome for themselves, but instead, they are focused on what’s best for the company. “I’m not saying that venture investors aren’t that way, but I’ve been venture-backed for a long time, and VCs have a very challenging role when sitting on a board because they have their stakeholders, and they’re also one of the company’s stakeholders.” Having raised significant financing, Contag knew she also needed a CFO to keep track of all the financials. Given she had a great work history with Benjamin Carter at Origen Therapeutics, Contag was able to convince him to join as CFO in September 2016.
“In the Greater San Francisco area, to hire a person with the level of expertise we thought necessary to get to the clinic, well, that’s hard to do on a small company budget, so we took a different tack.” The company hired several groups of people (working as independent contractors) that had taken cell-based therapies from IND through FDA approval. These groups had experience from companies like Juno Therapeutics, Dendreon, Iovance Biotherapeutics, and Gilead Sciences, with all chipping in time and experience. “Some got paid, some got stock.” This approach, sometimes referred to as a distributed expertise model, explains how the company can operate with just five employees. However, Contag notes she also used five consulting groups for various services. And as these consultants and her board have all worked together, she says it’s like operating a company of 35 people.
Though the ConcentRx name had been around for a while and may have built up some level of brand equity, there was the potential for confusion, as there were other companies with similar names by this point (e.g., ConcentRx Consulting, Concentrix Pharma). Besides, Contag and her new board had begun to think about the company differently. “The fundamental principle of why this technology works so well is that the oncolytic virus and the immune cell we use co-evolve together,” she elaborates. “It’s a mammalian oncolytic virus, and it’s an immune cell.” When a virus infects your body, this innate immune cell is one of the first responders. The mechanism of ConcentRx’s therapy is that the immune cell will hide the virus for a long time. The immune cell travels through the vascular system, leaves the vasculature and binds to tumor cells, and releases the oncolytic virus. That time frame where the virus lies dormant in the immune cells is called the eclipse period. “We thought of numerous names revolving around eclipse and what eclipse means and agreed on BioEclipse Therapeutics as the rebranding,” Contag states.
At the same time, the company changed its logo to reflect this network of things that are happening (i.e., lead compound’s MOA) that demonstrates it being multi-mechanistic (i.e., not attacking just one biomarker). “The impetus was, if you’re going out to raise money, it’s better to rebrand before a large fundraise so that you have one solid story to move forward with,” Contag concedes. Although the company had been founded in 2006, it didn’t really start until 2015-16. Besides, Contag felt it much better to rebrand sooner, rather than trying to do it in the middle of a series B or C. “Rebranding before the series A was important, as it gave us one story, from first dollar in to first in patient. As a small company you want to be consistent, so you don’t confuse your venture stakeholders.”
“The impetus was, if you’re going out to raise money, it’s better to rebrand before a large fundraise so that you have one solid story to move forward with.”
The mission and vision for the company at first seemed fairly straightforward, as early in the company’s life the founders had agreed that the most important thing was getting this technology into patients (i.e., patients first). “If you want to know the truth, the data was what ended up causing the biggest headache,” she confides. This is because when it came out, people thought it too good to be true. And this is where Contag became a bit passionate, as she felt the mission should include the word cure. “If you cannot envision the cure, you will never invent the cure!” she declared. And that’s when she got pushback. “Why not? Let’s make a plan. Let’s cure cancer. We have an amazing technology with this durable immune response. We need to test it in patients, but also, we need to develop it in light of what we learn out of our Phase 1. If it’s curative, or we believe it can be curative, why don’t we tell people why we believe that?” Some told her it was too complicated. She begs to differ. As an example, she says consider an animal model where a therapy given to an animal with cancer makes the tumor go away. If the animal is then returned to its housing environment, and over its lifespan that cancer never recurs, even when rechallenged with a new tumor implant, Contag argues you’re looking at something curative. Because for the most part, that’s not the way animal models go. Despite pushback from board members, founders, and even outside advisers, Contag persisted. “For a while, we were thinking, ‘Let’s envision the cure.’ Eventually, we landed on, ‘To deliver CURATIVE treatment to patients with cancer,’ and we’re all pretty excited about that, so I’m happy.”
But cure wasn’t the only place she’s received pushback. The other things people never want startup CEOs to talk about are cost and price. “I have a problem with that,” Contag admits. “The world is changing around the cost of drugs. If everybody’s calling for transparency, and cost and price are the areas where people lack transparency, doesn’t that say something?” Contag believes the BioEclipse therapy can be done more cheaply than other cell-based therapies, and being competitive on price is something to which she remains passionately committed.
Concerning branding, or rebranding for that matter, Contag has some words of wisdom. “I had to go to every person I’d ever spoken to about ConcentRx and then talk about BioEclipse,” she shares. “That’s a lot of work. So be prepared to tell the whole story. When naming your company, remember, you’re going to be living with it for a long time, even if you decide to at some point rebrand.”
WHEN IT COMES TIME TO LEAVE THE INCUBATOR
Pamela Contag, Ph.D. has known Melinda Richter, the global head of Johnson & Johnson Innovation - JLABS, for 15 years. “I knew of JLABS before it was even known as JLABS,” laughs Contag. The CEO likes the idea of incubators because it’s expensive to start a technology-based company, especially in biopharma. In her opinion, it doesn’t make much sense to spend investors’ money without first trying to leverage space, equipment, and other things from companies willing and able to help. However, working with such incubator organizations can still provide challenges. For example, The JLABS facility biosafety level caps at level 2; therefore, part of her work had to be done elsewhere. But the benefits of working with JLABS far outweigh the challenges. “It puts you in the thick of things, and you can see what other companies are doing,” she attests. “JLABS brought in multiple investors and speakers, plus, they had excellent equipment and knew how to take care of it.” This enabled BioEclipse to progress on a shoestring budget, first by securing offices and then laboratory space. As the company successfully raised its series A, it graduated from JLABS (at the end of February 2020) and into a new space.
WHY STARTUP CEOS SHOULD ALWAYS BE LOOKING FOR SPACE
“I must have looked at dozens of spaces for BioEclipse Therapeutics,” Contag shares. In fact, she says as a startup CEO in an area like San Francisco, you should never stop looking. “Space is so tight on the peninsula, and the vacancy rate right now is under 2 percent,” she elaborates. And new stuff that gets built is snapped up pretty quickly. “But until I finish with my Phase 1 trial and have data, it doesn’t make sense to spend investors’ money building a palace,” she states. Contag says she sees this all the time; people get millions of dollars, which seems like a lot at the time, but it goes very quickly when it’s spent on developing a technology while also paying to build out an expensive space. Her advice: don’t spend investors’ money on building before having proof of concept (POC) for your technology, and perhaps having even met a few milestones, too. This is why half of the BioEclipse team is at Andy Kogelnik’s Open Medicine Institute. “I went there, loved the lab space, and then realized it was where I started my very first company,” she laughs. She didn’t recognize it because it had been remodeled. “The Open Medicine Institute is excellent at setting you up quickly, and as Andy is an M.D., Ph.D. who understands infectious diseases and what I was bringing in, we were able to set up BSL 2 [biosafety level 2] labs very seamlessly.”
But if BioEclipse proves successful, eventually she’ll have to build, which begs the question: does it have to be in San Francisco, or is she open to trying to find a place where she’d be able to get more value per square foot? This is one of the most important questions an operational person faces, and the answer depends on your technology. “If you’re actually developing a product, and you can easily ship all over the world, you can have one big space,” Contag attests. “If there’s a time limit or an expiration date on your cells, then you have to have distributed space. If you need manufacturing space to control access to your therapy for shipping and delivery to the patients, then you want someplace less expensive than the Bay Area.” She says you have to be willing to go where the skillsets to do such things reside. These are some of the reasons she says she will never stop looking for space. “You have to keep your finger on the pulse of what’s going on in real estate if you hope to build a sustainable company after you’ve developed your business model."
Some hold the belief that the only places where things are happening in biopharma are Boston and San Francisco. Contag disagrees. “I’ve been doing this a long time, seen lots of cycles, and different cities are creating opportunities for companies to move there and assist with accessing talent, and we should be open to that. You have to be willing to either somehow get your product or representatives there, and in such a situation, a distributed model can work very well.”
PREPARING TO BECOME A BIOPHARMA LEADER
Like many first-time company founders who soon find themselves as leaders, Pamela Contag, Ph.D., CEO of BioEclipse Therapeutics, read books and attended courses on leadership. “What’s really important is having a mentor who’s willing to teach you the ropes,” she advises. And when you get such an opportunity, have the situational awareness to pay attention, take notes, and watch them carefully. “One of the first people who agreed to be a mentor gave me a book to read that we’d then talk about,” she says. And while this proved beneficial, she learned much more by just being a conscientious observer. Her first mentor was Karen Richards, a Ph.D. in the first laboratory in which Contag worked. “She was always upbeat, super smart, and lifted up those around her,” she reflects. From Richards, Contag saw how a leader can positively impact an organization’s culture just by how they carry themselves from day to day.
Another mentor she had was David Carter, then an executive at American Hospital Supply. “He had run several large and small companies,” she recalls. Contag became connected to Carter through an IP attorney. “He read the business plan and loved the technology, and I not only got to observe firsthand how he went about building his network, but he made his network available to me.” But Carter also gave her an important piece of advice, which she’s applied at every company she has founded. “You can talk to VCs, but start with bankers. Let bankers tell you what the next five years will look like, and then think about your company entering into that period because bankers know about exits.”