Despite some knock-out successes and world-class research, Seattle’s biotechnology industry has remained relatively small compared to other hubs around the country.
One of the biggest challenges for the region is the lack of a large, anchoring biotechnology company, often cited as a core reason for the industry’s middling performance. So, what if the solution is not to look for the next blockbuster company, but instead to support smaller, successful ventures?
That was the suggestion of Claudia Mitchell, a biotech executive and entrepreneur who sold her most recent company for $100 million in February. The startup, called Universal Cells, was bought by Japanese giant Astellas Pharma and was just five years old at the time.
Speaking at Xconomy’s What’s Hot in Seattle Biotech event Tuesday, Mitchell said larger biotech companies bring obvious advantages to the industry.
“I wish we had more Junos,” she said, referring to cancer immunotherapy company Juno Therapeutics, which was acquired by Celgene for $9 million in January. But, she said, that may just not be practical.
“It’s hard to have several Junos a year, but I think it’s easier to try to reproduce Universal Cells,” Mitchell said. “We have a lot of room for small companies like Universal Cells, and if we had more successes like that we would have… much more fertile ground for several Junos afterward.”
Universal Cells was funded through a combination of angel investment and bootstrapping, keeping its team and idea small but focused. The company’s technology genetically alters stem cells so that they can be used by anyone, instead of patients needing to use a their own stem cells or find donor stem cells with matching biomarkers.
Mitchell said part of the company’s growth tactic was prompted by a lack of venture capital available to biotech startups in the Seattle region. But it also helped the company have a modest but successful exit in a short timeframe.
Ivan Liachko, the co-founder and CEO of Phase Genomics, who also spoke at the event, also pointed to investment funds as a challenge for Seattle startups. He said Phase, which sells laboratory software for manipulating and understanding DNA, was lucky to have a quick-to-market product that let him bootstrap the company during its early years.
While small successes and better investment are important parts of the puzzle, large anchor companies still play a big role. That point was underlined during the event by biotech investor and entrepreneur Peter Thompson.
“The reason why that’s so important is that then it regenerates a renewable cadre of executives with different skill sets that can be applied at the different stages in the process of company creation,” Thompson said. He is a partner at biotech investment firm OrbiMed Advisors and has co-founded a number of companies, including the stealthy Silverback Therapeutics.
Thompson pointed to Immunex, a Seattle biotech giant acquired by Amgen and later shut down, as a prime example.
“Immunex seeded a whole bunch of companies,” he said, adding that retaining good biotech talent is something the Seattle area struggles with.
Still, the idea of focusing on smaller, quickly successful companies is an interesting one, although it will take overcoming the industry’s traditional focus on make-it-or-break-it blockbuster companies.