Life-science challenges: Attracting capital, keeping top talent

BOULDER — The venture-capital and government-funding landscape has changed for life-sciences companies, making commercial biotech companies and university research institutions rethink where to look for their next round of financial backing.

Equally vexing is the ongoing competition to hire and retain top talent, said participants of BizWest’s CEO Roundtable on Life Sciences held Tuesday, April 18, at the Jennie Smoly Caruthers Biotechnology Building on the University of Colorado Boulder’s East Campus.

“Funding for life-sciences companies has experienced negative growth since the third quarter of 2013, and that’s tough,” said David Traylor, senior managing director of Centennial-based Golden Eagle Partners, an investment bank that serves the life-science and cannabis sectors. “The big VC deals are getting bigger, but the smaller deals are going away,” he said.

All agreed that is has become more difficult to obtain funding, hindering efforts to take ideas for new drugs to market and advance research for new drugs and therapies.

“It’s always a race to revenue before the VC runs out,” said Rob Jenison, senior vice president and chief technology officer of Great Basin Scientific, a diagnostics company he co-founded in Longmont in 2007 before it was moved to Salt Lake City at the urging of investors. Jenison said it’s tough to find venture capital early to flesh out a proof-of-concept. “It’s hard to get someone to listen to the whole story. Having a proof of concept to show makes a difference in obtaining funding,” Jenison said.

Misha Plam, chief executive of 8-year-old AmideBio LLC in Louisville, said his company is “still trying to make it.” The company makes peptides that are used in research and discovery of therapies for diabetes.

Plam said the company has begun working on a therapy to treat a small market — babies whose pancreases create too much insulin. The condition is considered an “orphan disease” because it affects fewer than 200,000 young people, and patients generally will grow, if treated with AmideBio Glucagon, out of the condition by the time they are 10 years old.

“By then, the pancreas can rebuild itself,” Plam said.

Plam said developing a drug for an “orphan disease” is appealing because it requires less investment. But obtaining funding to advance the drug has been negatively affected by government budget cuts, Plam said.

“The National Institute of Health has given us a high rating, but when we applied for an SBIR grant, we were not funded. … Seems the freeze on hiring has stopped the issuance of grants,” Plam surmised.

Small Business Innovation Research grants are part of a U.S. government program, coordinated by the U.S. Small Business Administration, intended to help small businesses conduct research and development.

Diagostics companies, such as Jenison’s, are having a difficult time finding funding, while digital health is expanding and computational biology is on the increase, said Brynmor Rees, director of the University of Colorado Boulder’s tech-transfer office. Computational biology is the science of using biological data to develop algorithms and relations among various biological systems. Prior to its advent, biologists did not have access to very large amounts of data. “It’s emerging, but getting big will be the challenge,” Rees said.

Tom Cech, 1989 Nobel Prize winner, distinguished professor at CU and director of the university’s BioFrontiers Institute, said the funding game going forward will be different.

Nationally, private-sector partnerships between large companies and universities will be targeting solutions to specific problems to be solved, Cech said. He said the advancement of computational biology is an opportunity, and that it is creating a huge increase in student interest because it can create new research programs.

Charles Stacey, president and CEO of Accera Inc. in Boulder, a clinical development company focused on therapeutics to treat neurodegenerative diseases, including Alzheimer’s, said his company has been fortunate to have investors with deep pockets. Global life-sciences investment firm Inventages, which is backed by food giant Nestle, has been an investor since 2004.

“Capital is always the key in our industry,” said Stacey, who worked in the United Kingdom before joining Accera in 2015. Stacey served as an investment manager with London-based Inventages.

Stacey said there are more venture-capital opportunities in the United States than there are in the United Kingdom.

“U.K. companies struggle to get money. There is more risk VC in the U.S.,” he said.

Competition for talent

The United States for a long time has enjoyed the perception that it has been the world leader in science. Cech said the United States could be losing some of that cachet.

“That premier position won’t go away in the next 10 years, but there will be a rebalancing,” Cech said. “Other countries, like China, are making a big biomedical push.”

Cech also pointed out that changes in the issuance of work visas for scientists from other countries could be detrimental to the U.S.’s position.

“We make discoveries with a diverse set of people,” he pointed out.

Jenison said there is a still a disconnect between academia and the commercial sector when it comes to science.

“We get Ph.Ds from the University of Utah, and they are good, but they lack experience in the business world,” he said.

Rees said there is a movement at CU to have students think more broadly, to help make the move from academic research to industry. “The focus at CU Boulder is to build an entrepreneurial mindset,” Rees said.

Participants

Tom Cech, distinguished professor, University of Colorado Boulder and director, BioFrontiers Institute; Rob Jenison, senior vice president/chief technology officer, Great Basin Scientific; Misha Plam, CEO, AmideBio; Brynmor Rees, director, Technology Transfer Office, University of Colorado Boulder; Charles Stacey, president/CEO, Accera Inc.; David Traylor, senior managing director, Golden Eagle Partners. Moderator: Christopher Wood, co-publisher/editor, BizWest. Sponsors: Jim Cowgill and Bob Bond, EKS&H LLLP; and Berg Hill Greenleaf & Ruscitti LLP.

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