Cross-Over Thinking

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Imaginatively applying ideas from one discipline to a completely different area is often the source of innovation and entrepreneurial success.

In the Israeli life sciences industry, a good success story that was inspired by an external source is the Given Imaging camera capsule. The breakthrough medical device was invented by a scientist whose expertise was in developing video cameras that were placed on the tip of missiles. When Gabriel Iddan heard from a medical colleague about the difficulties gastroenterologists had pinpointing lesions in the spaghetti-like interior of the small intestine, he came up with idea of mounting a tiny camera onto pill and having patients swallow it. The result was a camera that broadcasts images back to a computer, much like a satellite in outer space, as it winds its way through the digestive tract.

And just as ideas can bring interesting results when they move into the life sciences, so too when they migrate outside.

Recently, an Israeli life scientist achieved international success in the world of art when he created a series of photographs drawn from the insights, reflections and experience that he had garnered during more than 30 years working in research labs.

Eran Gilat is a neurobiologist who has published extensively in journals such as Brain Research and Circulation. His hobby and passion for many years has been photography.

A few years ago he decided to do a photographic project that he called “Life Sciences” where the subject matter is biological tissue.

The result has been crowds lining up to see his photographs in recent exhibits in New York, London and Israel.

What makes Gilat’s “Life Science” series unique is not that the photographs are taken by a scientist or even that the images display biomedical content, but the incisive philosophical reflection that the photos offer. (His site, still under construction, is here.)

Gilat’s “Life Science” photographs generally document artifacts comprising some form of tissue, organ or dead animal that is juxtaposed beside antique medical instruments and other objects, including food and naked bodies. Impeccably lit, the radically juxtaposed artifacts are laid out in a surprisingly orderly way – as though some kind of inexplicable medical experiment is about to take place.

Gilat’s photography hobby moved him into the art world, and he joins a long line of scientists or entrepreneurs who have strong interests outside their chosen field. Craig Venter comes to mind, with his love of yachting. So does Sir Chris Evans and his infatuation with cars. Entrepreneurs often expand their interests or seek new challenges. What are others in biotech circles?

Bernard Dichek

Registering a company in Malaysia

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My last post discussed the biotech landscape in Malaysia. Now I want to talk about setting up a company there. Malaysians can register sole proprietorship firms and co-operatives, partnership firms, private limited and public limited companies with the Companies Commission of Malaysia (CCM). However, foreigners cannot set up sole proprietorship or partnerships in Malaysia, unless they have permanent residency (PR) or have availed citizenship under the “Malaysia My Second Home” (MM2H) program.

There is no restriction on maximum shareholding, meaning that foreigners can own 100% of a private limited company. However, it is mandatory to apply to the Foreign Investment Committee (FIC) for approval, for any company with foreign investment that intends to transact with governmental departments. This also requires that there is at least 30% investment by the local “bumiputra” (ethnic Malay). Foreigners can register a private limited company (by shares or by guarantee or unlimited liabilities) or a foreign company under the provisions of the Companies Act 1965. Foreigners must appoint a company secretary, who is authorized to register a company or a member of a professional body approved under the Companies Act, or a person licensed by CCM.

Malaysian has e-governance and most stamp duties, transactions and forms are printed and uploaded by the company secretary. Usually it takes 5 working days for allocation of a valid company after application (Business Name Approval Form: Form A or PNA.42) with three proposed company names under the provisions of the Business Registration Act 1956 (ROBA 1956). You will have a maximum of 3 months from the date of the results to register a company to operate in West Malaysia, which includes Peninsular Malaysia and the Federal Territory. It costs between Malaysian Ringgits (RM) 2,500 and RM2,800 to setup a company or buy a “shelf company.”

A “shelf company” is a ready made or an existing company incorporated under the Companies Act. These are available to investors, who require a Malaysian company on an urgent basis. Normally they are formed with a RM2 paid up share capital, 2 local directors and shareholders, and a RM100,000 authorised share capital (stamp duty paid).

It is to reduce the time needed for various statutory and regulatory processes in forming the company in CCM. Entrepreneurs who want to start the business immediately often make use of a shelf company. Upon purchase of a shelf company, the existing directors resign and transfer shares to the purchasers. Transfer is deemed complete upon full payment with return of signed documents for stamping.

There is a pre-signed indemnity letter from the previous shareholders admitting liability for transactions before the purchase date and absolving for liabilities after the purchase date. Therefore, shelf companies are free from liabilities and the company secretary should be able to help you to buy them. The name of the shelf company may be changed to another name, subject to the approval of the ROC (Registrar of Companies). The format and description of Memorandum of Association (MOA) and Articles of Association (AOA) are quite similar to other countries.

A company must have a minimum of two directors (18 years or older) with their principal or only place of residence in Malaysia and not operating under bankruptcy. A person with a valid work permit will qualify for a permanent residential address status and can become company director in Malaysia. Directors need not be shareholders of the company. In Malaysia, company directors are imposed with statutory duties, duty of care and fiduciary duties and are governed by a code of ethics. Always, the first directors of a company shall be named in the MOA and AOA of the company.

I strongly advise you to understand the implications of becoming a director of a private limited, or of your own company, in Malaysia. Directors there are responsible for general management of the company, whereas shareholders are free from all liabilities except for share capital already paid.

Biotechnology companies in Malaysia:

BiotechCorp (Malaysian Biotechnology Corporation) is an independent agency under the Ministry of Science, technology and Innovation (MOSTI) and is owned by the Minister of Finance (MOF). BiotechCorp is governed by the Biotechnology Implementation Council and advised by the Biotechnology International Advisory Panel, both chaired by the Prime Minister of Malaysia.

I’d advise all foreigners to contact BiotechCorp, which actively promotes foreign direct investments by creating a conducive environment for biotechnology. After successful registration of a biotechnology company with CCM, I recommend that you to apply for the BioNexus Status, which has many associated benefits and incentives. A biotech company with a strong portfolio of scientists and advisors and a strong business model with research and development activities in life sciences or use of biotech processes will be eligible to get BioNexus Status.

There are nine Bills of Guarantees (BOG) for BioNexus status companies, namely, freedom of ownership, free to source funds globally, free to bring in knowledgeable workers, eligibility for competitive incentives and other assistance, eligibility to receive assistance for international accreditations and standards, a strong intellectual property regime, access to supportive information network linking research centres of excellence, access to shared laboratories and assistance from BiotechCorp as the one-stop agency.

In the next blog, I will write about my experiences setting up a biotechnology company in Malaysia.

Prashanth Bagali

The Moneyball VCs

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What makes a great venture capitalist? Conventional wisdom says it’s the experience, expertise, Rolodex, and the visionary eye for spotting the Next Big Thing.

But what if this were wrong? What if the important variables in the statistical game of hitting one or two “grand slams” in a VC portfolio, which then make up for the dead or dying companies, could be identified and replicated? Why can’t there be a Moneyball moment for the VC industry?

Enter Correlation Ventures and Ulu Ventures, two new firms with heavy emphases on ‘quant’ approaches. Launched in stealth mode in 2010 with limited partners including University of Texas Investment Management Company and others, Correlation’s co-founders David Coats and Trevor Kienzle spent years building a proprietary database of company data and outcomes from which to mine for variables critical to success. This was not trivial; data on private companies is just that, private, and Messrs. Coats and Kienzle forged relationships with Dow Jones and multiple VC firms to access historical non-public data. For hundreds of historical deals, they catalogued over 50 variables, such as syndicate composition, management experience, and, most importantly, outcomes metrics for those investments. Correlation could then run multiple regression analyses and identify those variables that account for the most variance. Now in the business in making new investments, Correlation is able to conduct due diligence quickly – typically within two weeks – by entering relevant inputs into their model and adhering to a strict threshold on overall profile before doing deals. They expect to invest in 50 to 75 companies with the average investment size between $1 million and $4 million.

“There is a pervasive notion [in venture capital] that the best investors are intuitive pattern matchers with an uncanny ability to spot new market opportunities,” says Clint Korver, partner at Ulu Ventures in Palo Alto. Korver and co-founder Miriam Rivera believe that quantitative analysis can enhance experience by allowing intuition to be intelligently applied to investment decision making. Unlike Correlation, Ulu takes a Bayesian approach, explicitly incorporating expert judgment about the future into their models. Ulu first builds a map of the key drivers of risk and value for a startup, including factors such as life stage risks, total addressable market, margins, competition, exit multiples, and future capital needs. Ulu then combines intuition and data to assess possible ranges and probabilities for each of uncertainty. A cash flow model ties it all together, allowing Ulu to perform sensitivity analysis and focus due diligence on the risks that matter most. Korver says “while we look for companies with probability weighted multiple on investment of 10x or better, we do not blindly follow the numbers. We make decisions based on a compelling story.”

There are several intriguing elements in the new “quant VC” development. First, we would argue that an important aspect of what VCs mean by “experience” is indeed being an expert pattern matcher – quickly identifying pitfalls and seeing the ingredients for success. A strict quant approach like Correlation’s is essentially the same thing, but with the added benefit of removing cognitive biases and prejudices and, importantly, discovering relationships between variables and outcomes heretofore unrecognized.

Second, our hunch is that the general applicability of the approach varies depending on the sector. One obvious challenge is that quantitative approaches to investing, be them in public or private markets, are necessarily backward-looking in that they use historical data, and there can be no guarantees that the future will replicate the past. We see this challenge as most relevant to sectors undergoing significant dislocation, such as healthcare, in which legislative reform and widespread restructuring is redefining value drivers in the industry. Similarly, it is unclear how quantitative metrics can inform investment decisions in de novo fields such as renewable energy or nanotechnology with no historical precedent. Another point to consider is the extraordinary holding times now required for VC-backed healthcare investments – more than five years from seed investment to exit, according to recent data from Silicon Valley Bank.

But those data are restricted to companies that actually had an exit; many, many more are held much longer. Ten years seems like a lifetime in a high technology industry, and to compress that period into inputs and outputs seems ripe for misattribution.

By contrast, IT and software industries have a rich investment history dating back to the birth of the VC industry with multiple business cycles and thousands of data points. IT businesses, in particular, are largely driven by market forces as opposed to scientific hypotheses, which also make them easier to model. The time to market is also significantly shorter. Groupon, which recently completed a $700M IPO, was founded in 2008, just four years ago – that’s value creation at breakneck speed. Consider these advantages in light of recent data published by partners at Atlas Ventures and Highland Capital suggesting that IT investments exhibit significantly higher variability in their return multiples compared to life sciences investments.

With 100x outliers, such as Facebook and Zynga, the larger variance may lend itself to delineating key factors for success in IT investments. Not surprisingly, tech-orientated VCs including Google Ventures are "beginning to embrace quantitative approaches ":http://www.nytimes.com/2011/07/20/technology/google-spending-millions-to-find-the-next-google.html?pagewanted=all to uncover lessons and refine their investing approach.

We’re attracted to the data-driven nature of the quant approach, and how Correlation makes and monitors investments is certainly more sophisticated that we can appreciate. But the jury is still out in whether venture-like returns will follow, especially in industries with high capital costs and long product development times, such as life sciences and healthcare. That said, with the venture capital industry contracting as a result of poor historical returns, quantitative venture capital offers an innovative approach for limited partners to mitigate risk and systematize early-stage investing with lean investment teams. Perhaps the rise of quantitative VCs also reflects the maturity of the industry, now with 30 years of ample historical data and the necessary informatics technology to digest it.

Innovative investing styles should be just as welcomed as innovative technology in the VC industry.

Adam Bristol and Justin Chakma

Going Nonexclusive

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Start up companies face a tough go- converting a new technology into saleable products on minimal funding- and those aiming at products for global health (or any health care products for sale outside the major market countries) have even a harder challenge by swimming against the conventional wisdom that a highly-priced, reimbursable product is the only way to profitability. For start-ups, time is money and the shorter time to a product prototype, the more likely is revenue and survival. To fund prototype development, most patch together funding from government (or very rarely, foundation) grants and private sources while trying to convince a major, established company that it wants access to the technology and/or the possibly-resulting products. For a start up developing low-margin/global health products, the basic deal is to either convince the major company partner to sell the licensed products at discounted prices in pre-defined low-income countries or, when the start-up has a technology platform for creating multiple products, grant the partner rights to only high income countries. In these deals, exclusive rights are “demanded” by the partner so that it can control product development, exploit the most profitable markets, and maximize profits. This is all very reasonable, but I think that the exclusive licensing route has enough problems for start up companies, especially those in global health, to consider using a nonexclusive licensing approach.

Of course, nonexclusive licensing is not feasible when the prototype is for a drug, given the large investment needed for product approval and the need for the licensee to control all aspects of development, approval, and sale to have a hope of a return on its sizeable investment. That being said, companies with platforms for discovering/creating/delivering drugs or vaccines, diagnostics, or medical devices could license them nonexclusively to multiple companies. For global health companies, by lowering the barrier to product development and creating competition among multiple licensees, they advance their goal of getting low cost products into use fast.

So in broad strokes, the advantages to pursuing a nonexclusive licensing strategy are:

  • products using or discovered using the licensed technology get to market faster than a single product developed under an exclusive arrangement
  • multiple similar products generates competition and therefore leads to the lowest costs and prices
  • the licensor may pursue development of products that are specific to its interests (e.g., low-cost diagnostics for treatments for neglected diseases sold to public sector customers)
  • lower transaction costs (less complicated negotiations and licenses)
  • more potential licensees, e.g., growing, regional or national companies
  • licenses may be modified to be IP only or include technology transfer or co-development depending on abilities and interests of the licensee

Of course, there are disadvantages:

  • the revenue from the multiple licenses needs to come quickly (e.g., as up-fonts) and must be significant
  • pricing needs to be well-thought out to be both attractive and non-negotiable (first-in should have the best pricing)
  • transaction costs could be high

Looking at the real world, while the large majority of licenses are exclusive, there are examples of successful nonexclusive licensing programs, e.g., the licensing of the Cohen-Boyer and PCR technologies, each netting the licensors hundreds of millions of dollars. In the global health field, Gilead Sciences has an extensive nonexclusive licensing program in which 14 pharmaceutical companies manufacture and distribute generic versions of two of its antivirals in more than 100 resource-limited countries (For Gilead’s partnerships, click here) and that has helped bring the cost of the drugs for HIV/AIDS treatment down 100-fold. And, while there are relatively few early-stage companies that have products in development to address global health/neglected diseases, several are built on platforms that could be licensed nonexclusively to generate revenue for product development. My list includes:

Aktiv-Dry LLC, nano-particle drug delivery

Archivel farma SL, vaccine technology

Diagnostics for All, diagnostics platform

Genocea Biociences, vaccine technology

GenPhar, vaccine technology

Ionian Technologies, diagnostics platform

Rapid Biosensor Systems, diagnostics platform

Xcellerex, biomanufacturing platform

The nonexclusive route is not conventional wisdom, but for start-up companies, especially those in countries with little venture capital investment, it is worth a try.

Chris Dippel

Engineering a path from science to business

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The folks at Nature Biotechnology asked us authors for a description of how we’ve navigated our careers from bench to business. My story is still a work in progress, but as a recent Ph.D. I do have some lessons for how you can prepare yourself for a career beyond research. First here’s a brief bio to give insight into my perspectives and biases.

I completed an Engineering Physics undergraduate degree at the University of British Columbia, with a focus on wireless and photonics. During this time, I worked at my first startups as an engineer, which ultimately sewed the entrepreneurial seeds. Following, I decided to pivot and apply my engineering skills to health and completed a Ph.D. in Genetics at the Institute for Systems Biology (ISB). My decision to conduct a Ph.D. was driven by my interest in the commercialization of advanced technologies and the ISB was a fantastically entrepreneurial organization to pursue this goal. Concurrent with my Ph.D., I was fortunate to work as a venture capital fellow at the ISB-affiliated venture capital firm, the Accelerator Corp. This was a tremendously valuable experience and during my three-year tenure, the Accelerator team started 7 biotech companies. After my Ph.D., I started looking for my next startup opportunity and met my co-founding team while working at an innovative technology transfer group, the Centre for Drug Research and Development. About 1.5 years ago I jumped ship to be a co-founder and CEO of Precision NanoSystems, where we are developing technology at the convergence of drug delivery, nanotechnology and genomics.

During my tenure as a Ph.D. student I often contemplated how to best use the degree to achieve my business goals, and as some of you are likely realizing, the path from bench to business is not always clear. Here are some lessons I learned during my degree that may be helpful for those wanting to pursue an entrepreneurial or business career:

Experience more than your Ph.D. offers.

Graduate or postgraduate studies are designed as a scientific training ground for a career as a scientist or professor. The knowledge gained is narrow and the skills learned are specific. For anyone serious about transitioning off the bench, you will need to actively pursue additional experiences and skills outside of your research work. There are many ways to do this during your degree, and I found that volunteering at an organization in an area of interest is one of the best ways to get your feet wet. My time at the Accelerator Corp. (which I initiated through a volunteer position) was one of the best experiences of my Ph.D. There I learned a tremendous amount about biotech, startups, and venture capital. I was very fortunate to have a Ph.D. supervisor supportive of my entrepreneurial interests and was able to dedicate half of a day to a full day a week to the experience (in addition to most of my evenings and weekends). If you are less fortunate, you may receive push-back from your supervisor, who may not recommend taking the time away from your thesis or papers.

However I strongly disagree. Ph.D. and Post-doc work is highly repetitive and obtaining orthogonal experiences will greatly enrich your time as a student. Further, your supervisor will benefit from his or her student’s success, be it in academia or industry, and should be supportive of those that demonstrate such ambitions.

Do not be wedded to a given technology.

During a Ph.D. or Post-Doc you spend a tremendous amount of time on a specific topic. At the outset you may feel completely invested in your corner of the technology world and that you should pursue a career involving that technology. However, this can be very limiting and greatly reduce your opportunities for success. Technology trends change constantly and what you picked 6 years prior may not be your best opportunity moving forward. Once you publish your papers or submit your thesis, take this unique transition period to adjust and consider on what technologies or business area you want to spend the next 5-10 years. Compare each potential area of interest as though you are making an investment (your career), and be prepared to defend your choice to your future self a few years out.

Want a job, create a company.

Lastly, the best way to gather vast business, management, and leadership skills is to start your own venture. Being a first-time entrepreneur is akin to drinking from a firehose and this time will greatly accelerate your experience and perspectives on our industry. Starting a company may seem like a daunting endeavor, but considering the potential career upside, it is actually a pretty reasonable proposition. Even if you fail, you will learn a tremendous amount, meet a community of like-minded folks, and become comfortable with taking career-altering risks. I suggest spending at least an extra 6 months at your institution to find an idea with legs and try to get it off the ground. Don’t do any bench work at this time, but use the period to find and test the commercial viability of potential new ventures. Be bold – talk to your tech transfer office to see if any technology is looking for a founder, ask professors to fund you from existing grants while you examine the commercial viability of a technology, join entrepreneur communities, attend founder speed-dating events, etc. And if your venture doesn’t fly, this time is a drop in a bucket compared with the 6 years just spent padding your academic CV.

James Taylor

GM Plants and 7 billion people

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Beginning in the mid-’70s, Brazil prepared for a gene revolution. Patent, cultivar and biosafety laws were enacted in the ’90s before the commercial release of agricultural biotech products. Brazil has consistently invested in human resources training in science for the last 30 years. Science in Brazil is growing at a rate comparable to or higher than most developed countries.

Also, during the past 25 years, Brazil has trained excellent plant cell, molecular and developmental biologists at EMBRAPA research center CENARGEN (the National Research Center for Genetic Resources and Biotechnology), to team up with plant geneticists and breeders to develop the best programs for the tropics. Funds for molecular biology were applied to plant genetic engineering, but still, somehow plant breeding disappeared in Brazil during the last decade. Why is that?

Well, when the first genetically modified plant was commercially released in 1995, worldwide non-governmental organizations (NGOs) protested against it, a movement supported by the judiciary system in Brazil. We lost every legal action against the NGOs from 1997 on. One judge voting against the release of GMOs said he was judging a dispute between Greenpeace and Monsanto. The decision had nothing to do with science or what would be the best for Brazilian agriculture. It was a political and ideological decision.

The consequence was that from September of 1998 until 2005, Brazil could not commercially release genetically modified plants in Brazil. Those willing to do plant molecular biology and genetically modify plants even at scientific level were denied funds, as rules created by the Ministry of Environment in the country required years of endless justifications for scientists to release a field experiment. Beans engineered to be resistant to the Golden Mosaic Virus by applying RNA interference methods took almost 10 years to be released, with considerable opposition coming from NGOs, which garnered support by sectors of the Executive in Brazil.

What is really sad is that this is not isolated to Brazil. Plant genetic engineering in Europe is a shadow of what is was during the ‘80s, when Marc Montagu and Jeff Schell built the scientific basis for plant genetic engineering. Twenty years later, Ingo Potrykus is still struggling in Europe to bring his Golden Rice to market. This genetically modified rice has the potential to save the lives of millions of children in the developing world by fighting vitamin-A deficiency. Potrikus also has struck deals with dozens of biotech companies for patents on the technologies he used to create his rice. The world’s poorest regions of Central and West Africa would gain the most from the gene revolution. However most work in biotech by the large corporations are directed to soybean, cotton, cannola and corn — not much for staple crops. No wonder those representing developing countries feel excluded from the gene revolution.

Science and scientists are on the spot. Thousands die of hunger each day, mostly children. Ignoring this and not using the bioscience advances to attenuate this problem is morally unacceptable. Brazil surveyed recently its poverty. There are almost 20 million living at extreme poverty levels, close to 10% of the Brazilian population. They do not have enough money to eat two meals/day. In some rural areas of the Northeast the poverty average ranks twice the national average. It is imperative to have a global, science-based effort toward a less hungry world that builds jobs and focuses on major constraints for agriculture development in the tropics. This effort cannot be achieved if we demand never-ending biosafety analysis of products known to be safe. We must focus initially on plants resistant to drought, pests, and to soil aluminum toxicity, which affect more than half of tropical soils. Grasses capable of fixing nitrogen from the air are also needed (following up the work by Johanna Döbereiner, who died some years ago) to allow poor people to save the cost of oil-derived urea, which pollutes the soil and the water.

We can make the Gene Revolution work in the same direction as the Green Revolution did decades ago. We have a much more powerful science in our hands. We need an effective strategy to unite the world toward this goal. How do we explain to the developing world that almost a decade was required for the innocuous rice produced by Potrikus to be released, while a fast-track was found to commercially release a cosmetic that prevents wrinkles, purified from a neurotoxic protein from the Clostridium botullinum? Hunger is a world problem. Wrinkles are not. Poverty in Brazil is a small fraction of the world`s poverty, and Brazil will face it. What about the rest of the world? Can we ignore the advances of biosciences in this context? Think about it, please.

Luiz Antonio Barreto de Castro

Biotech in Malaysia

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Malaysia is located in Southeast Asia with two distinct regions, namely Peninsular west Malaysia and East Malaysia. It has a population of approximately 28 million, and is famous for elegant and gigantic “PETRONAS Twin Towers” located in the heart of Kuala Lumpur (pictured above, at night).

Malaysia also has one of the best economic records in Asia, with GDP growing an average 6.5% for almost 50 years. The economy has traditionally been fuelled by its rich natural resources, mining and agriculture, but is expanding in the sectors of science, tourism, commerce and medical tourism. It is one of the largest exporters of petroleum, tin, rubber and palm oil in the world. It is the third largest economy in ASEAN (Association of Southeast Asian Nationals) and 29th largest economy in the world. The country is multi-ethnic and multi-cultural (Malays, Chinese and Indians) and its freedom of religion is protected by a secular constitution. Bahasa Malaysia or Malay language is the national and official language of the country, though English is widely used in commerce and industry.

The infrastructure of Malaysia is one of the most developed in Asia. The country has seven international ports and 200 industrial parks dedicated to science and technology industries. Malaysia has 58 airports (36 on East Malaysia and 22 on Peninsular Malaysia), with 37 of them having scheduled passenger service on commercial airlines. Malaysia has 8 international airports and a well-networked telecommunication system in both rural and urban areas. The country is self-sufficient in energy production from oil and natural gas.

Malaysia encourages foreign investment in biotechnology and offers many incentives and advantages to foreign investors. The national interest in biotech started in the 5th Malaysian Plan (1986-1990) but was given due recognition and emphasis in the 8th Malaysian Plan (2001-2005). Malaysian Biotechnology Corporation Sdn Bhd (BiotechCorp) is the custodian of national biotechnology policy (NBP) and was launched in 2005 to provide a development framework for the industry over three phases. Those phases are:

Phase I – Capacity Building (2006-2010)

Phase II – Science to Business (2011-2015)

Phase III – Global Business (2016-2020)

Since the launch of the NBP in 2005, the Malaysian biotechnology industry has recorded a total investment of $1.3 billion (RM 4.5 billion) by 2009. Out of this investment, 57.8% was funded by the government, while the remainder was funded by the private sector. The contribution of the biotechnology industry toward the gross domestic product (GDP) in 2009 was estimated at 2%.

In terms of total employment, it is estimated that 54,000 people were employed in the life-science and biotechnology-related industry in 2009. As of Sept. 30, 2009, a total number of 349 biotech companies were identified in Malaysia, a three-fold increase from 117 companies in 2005. Out of thse 349, 41% were involved in ag-biotech, 38.4% in healthcare biotech, and the remaining (20.6%) in industrial biotech.

But, due to the higher entry barriers for medical devices and molecular diagnostic kits, the extensive product regulations and procedures for registration, and the costs of manufacturing and exports, healthcare biotech contributed only 31.6% of revenues. Of the total investment, the industrial biotech sector has the highest investment dollars, with close to $300 million (RM 1 billion). Total investment in agricultural and healthcare biotech sectors is $287.5 million (RM 1 billion) and $235.1 million (RM 822.8 million), respectively. This investment includes contribution from the US, UK, France, Germany, Italy, Belgium, India, China, Hong Kong, Singapore, Thailand, Australia, New Zealand, Japan and Taiwan.

There is a tremendous base building in Malaysia. My next post will explore in more detail the rules around launching a company there.

“Prashanth Bagali ":http://www.linkedin.com/in/bagali

Financing early stage biotech

I read Bruce Booth’s blog, Life Sci VC, when I get the chance, and he’s often lent his skills to Nature Biotechnology. We had him into our offices as part of our "Meet the Author ":http://www.nature.com/bioent/authors/index.html series, for example, where he discussed his article on biotech IPOs.

We’ve been cross-posting relevant material from his blog on Trade Secrets, rebuilding the posts from scratch. The truth is, they never look quite as good rebuilt as the do in the original, so I’m providing the link this time. He’s written an interesting piece on funding for early stage biotech. Read it here.

Brady Huggett

Brazil as host

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Biotechnology is growing in Brazil but has not reached the level of other countries. The biotech industry in the country is about the size of biotech in Georgia /USA.

Part of the problem is that there is competition with other countries, particularly China. Part of the problem is the regulatory limitations in Brazil, particularly in the area of intellectual property rights (IPR). I see some signs, however, indicating that international companies, big and small, are interested in moving to Brazil. I got in touch with two of these companies — Amgen and Bio-Sourcing. Amgen is an old giant, and Bio-Sourcing is a small company that will be dealing in Brazil with genetically modified animals to express pharmaceuticals for the veterinary area.

Based upon the growth rates of about 12% per year of the pharmaceutical sector in Brazil, Amgen expects that the country will become the fifth largest pharmaceutical market in the world by 2015 (up from 8th today). Amgen hopes to make its medicines available to patients in major markets around the world, including Brazil and its quickly expanding middle class. A key element of Amgen’s strategy is to ensure that the medicines produced by the company will in time be recognized by the Brazilian government, medical professionals and patients as best-in-class. They believe that despite regulatory difficulties, Brazil provides a favorable environment for clinical trials.

Thus, Amgen will invest not only in clinical trials but also in scientific research to demonstrate the quality of their products in their main therapeutic areas: oncology, hematology, nephrology and bone health. Its development interests span areas as inflammation, neurology and metabolic disorders. Considering clinical trials, Amgen distinguished in Brazil an interesting multiethnic population with a balanced age profile, competitive costs and high quality of research standards and professionals. Laboratorio Bergamo, a local, traditional therapeutics company bought by Amgen last year, will produce products for clinical trials. One can see that Amgen took its decision after an in-depth analysis that might eventually be followed by other companies in the pharmaceutical sector.

Bio-Sourcing exploits a unique technological platform that they believe has become the world leader in animal transgenesis. Bio-Sourcing is thus able to provide the industry with a cheaper production process that is both flexible and environmentally safe, according to sustainable development standards. The company develops its own pipeline of innovative products. Its molecules are produced through genetic engineering, within the milk of big mammals such as cows or goats. To this day, milk remains one of nature’s primary products, and is recognized as safe by regulatory authorities. It also allows for direct delivery, thus avoiding heavy purification constraints. This technology is a new breakthrough in human and animal nutrition as well as in dermo-cosmetics. Moreover, it is highly suitable to the production of monoclonal antibodies at a very low cost. Lastly Bio-Sourcing aims to play a part on the animal selection market, by mastering cloning and animal transgenesis techniques.

Bio-Sourcing is the sole owner GTC world exclusive license, which includes its technology, its produced proteins, its means of production, and its technology transfer to Bio-Sourcing, as well as its patents on all sectors except human drugs. GTC has already registered a medicine produced through animal transgenesis, both to FDA and EMEA, which is currently administered to patients. GTC has also developed numerous molecules, the main part of which being monoclonal antibodies.

Bio-Sourcing’s managing team has entered into discussion, at the decision-making level, with a major group in Brazil focused on monoclonal antibodies. Those industrial discussions seek to validate bioproduction projects that would be of interest to industry leaders in the country and might work safely and with efficacy in Brazil, according to the regulation in place by the CTNBIO – Brazilian National Biosafety Commission.

On the one hand, BioSourcing will consider only products previously reviewed and approved by industrials. And Bio-Sourcing will allocate its production and development means to its Brazilian subsidiary.

Accustomed to Brazil’s language and culture, Bio- Sourcing’s CEO has already made contact with local players. Brazil is highly receptive to transgenesis techniques, but it also has attractive production costs, great know-how in milk industrialization and a dynamic internal market – all of which should help Bio-Sourcing succeed.

Bio-Sourcing already has its own patents, in particular regarding an innovative molecule that could become a blockbuster, thanks to multiple applications in different sectors. Its management team has experience as chairman, CEO, chief business officer and chief scientific officer in major international groups. Clearly, Brazil being a giant in animal husbandry has attracted Bio-Sourcing, but in this case the regulatory environment in Brazil might have played in its favor, too.

Luiz Antonio Barreto de Castro

New Bioentrepreneur article

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We’ve posted a new article, Shape Shifting, to the Bioentrepreneur site. The piece examines how to mold a company’s pipeline and opportunities, making it most attractive for partnering or buyout. It was written Bob Baltera, CEO of Amira (at the time), and the title refers to the necessity of changing the shape of a company as it progresses.

But shape shifting could also refer to the article itself. The process began early this year, after a meeting with Bob at the JP Morgan healthcare conference. The article went through several drafts and took months to put together — long enough for Amira to be snapped up by Bristol-Myers Squibb for $325 million, with another $150 million hooked to milestones.

Which meant we had to go back and reshape the article before publication to reflect this new outcome for Amira. Even without milestone payments, the buyout is a big win for Amira investors, who had put $28 million into the firm. It is outcomes like this that keep VCs interested in biotech.

You can read the HTML version of the article here, and the PDF version here.

Brady Huggett