Commercialization plenary summary, part 2 of 4
One of the most dynamic speakers of the conference thus far was Greg Bonfiglio of Proteus Venture Partners. A well-known VC speaker in this area, Bonfiglio shared his perspectives of how the commercialization of regenerative medicine technologies, and of biotechnology in general, has evolved.
Proteus Venture Partners supports or invests in companies developing diverse products for the regenerative medicine market, ranging from ambitious cell based therapies or compounds that trigger endogenous regeneration, to tools such as cell and cell-based assays that are needed to advance discoveries in this field.
Bonfiglio illustrated that the early days of regenerative medicine companies were tissue engineering companies, but that they came out under extremely different conditions in the 1990’s where the funding was relatively easy. Inflated expectations crashed along with the market around 1999, with the IT sector leading the drop.
Investment in regenerative medicine seemed to have been triggered with the announcement of $3 billion to be deployed through the California Institute of Regenerative Medicine (CIRM). This also had the effect of stimulating other governments to contribute money to the field.
Today the situation is very different. “We’re seeing a significant volume of clinical trials” says Bonfiglio, “It’s indicative of a mature market.” He continued to show that dramatic revenue growth in cell therapies has been seen over the last few years.
That’s especially impressive considering the economic crisis of the last few years, which Bonfiglio described as “the worst economic environment of the last 75 years.”
Any indications of success were tempered by warnings of significant challenges in the field, namely: standardization of cell lines, technologies for safe and reliable expansion of cells, methods to track cell migration & engraftment, and mechanisms for modulating immune function. Regulatory environments need to be updated and clarified as well.
Perhaps the most pressing technological need (reiterated later in the day by Stephen Minger) is to set rodent toxicology models aside. Bonfiglio emphatically stated that too many technologies fail today because successful results in rodent models don’t extend to humans.
Some significant changes to biotech business models need to take place as well.
Bonfiglio painted the old, antiquated model of a pre-IPO company; one that would spend $90 million of precious start up funds to build a company that resembles a “miniature Johnson & Johnson”. The consequence is that most of investor funds would be spent on a façade (my word, not his!) that didn’t add any value to the underlying technology.
“We’re in an industry that builds products that need to work”, said Bonfiglio. The new regenerative medicine model that’s taking hold is one of companies that are collaborative and capital efficient. I presume the same applies to any biotech spinoff today.
“You definitely need to use [commercialization] centres to advance a virtual business — [knowledge] translation centers that offer support like state-of-the-art facilities, GMP compliance, and access to deep knowledge of regenerative medicine at associated academic centers.”
On a more pragmatic note, Bonfiglio also warned everyone that the availability of funds has shrunk as venture capital risk tolerance has dropped.
The old model that investors went by assumed that the risks in new companies could be mitigated by bringing in experienced management, forging cross-company collaborations (i.e. to scale up industrial production of a biologic), or improving patent positions (i.e. by licensing some key technology that was lacking). Today, companies need to look nearly perfect. An abundance of preclinical data and successful Phase 1, if not Phase 2, clinical trials need to be completed before you can deal with most institutional investors.
This puts for-profit companies in the odd situation where the largest source of funding for commercialization comes from government and government-sponsored bodies, like CIRM.
As industrial research seems to be moving back to quasi-academic settings, Bonfiglio ended on an upbeat note where collaboration is key and the idea of companies built within walls of patents and trade secrets is passé. “Don’t think of competitors as competitors.”
“There is a false notion that the way to create and capture value in any industry is based on a [patenting] land-grab. There is little sense in fighting [with each other]. Our industry needs to settle disagreements without litigation.”
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