Event recap: Accelerating Early Stage Research and the Rise of Virtual Startups

Virtual biotechs doing drug discovery today are leveraging a similar trend: remove the heavy fixed costs of building out your own laboratory…and move to a lower cost virtual model of renting lab capabilities via a global network of CROs and collaborators.
— Dr. Bruce Booth, Partner at Atlas Ventures

The high capital cost of biotech start-ups and reduced interest from risk-averse investors has recently been forcing start-ups to focus on fewer targets and outsource their lab work; a trend the industry has colloquially termed, ‘going virtual’. To explore the unique challenges of this new business model, Biotech Connection at Boston and our event sponsor, Charles River Accelerator and Development Lab (CRADL), brought together a panel of key opinion leaders and experienced biotech professionals to share their thoughts and expertise during an exciting and informative discussion. Our panelists included: Philip Lambert, PhD (Scientific Partner, Charles River Labs), Amrit Chaudhuri, PhD (CEO, Mass Innovation Labs), Ashok Kumar, PhD (Scientific Director, Jana Care), and Kareem Reda, MBA (VP of Business Development & Strategy, Evelo Therapeutics). The event was moderated by Seth Taylor, PhD (CFO & CBO, Mass Innovation Labs).

Dr. Taylor opened the discussion with a focus on how new start-ups obtain their funding and key challenges to this process. The panel was very quick to point out that while very large Series A funding rounds have been seen, “No one has that much in the bank!” These deals are always staggered investments contingent upon meeting specific milestones. Dr. Lambert also highlighted the fact that, “Location drives the way companies are built nowadays.” Access to expertise is a critical component to the success of any company, and Boston’s breadth and depth of talent and knowledge has cultivated a dense and diverse biotech ecosystem.

Discussing the direct costs associated with managing an R&D program, Dr. Taylor polled the panel on the pros and cons of in-house infrastructure vs. outsourcing to CROs. Dr. Chaudhuri commented, “Not surprisingly, start-ups have large upfront and ongoing costs, you could likely eliminate two-thirds of those costs by going virtual. CROs, on the other hand, have a distinct advantage to alleviate those costs by pooling in lots of projects, they create an economy of scale.” Kareem Reda highlighted the fact that CROs present an opportunity to leverage expertise in an area you are lacking, “It should come down to good scientific method. You have expertise to handle certain aspects but not others, so you need a key hire, one who knows best practices which will lead to the best data.” 

It comes down to the love of doing the science. As a CRO we had no equity in the companies we worked for but we loved the science and the relationships we made. CROs that want to be effective need to be invested in much more than just the protocol. The relationship must be a true scientific endeavor, not a fee for service.
— Dr. Philip Lambert, Charles River Labs

Dr. Taylor ended with the question on everybody’s mind: how to strike the right balance between dedicated in-house infrastructure vs. going virtual. Dr. Chaudhuri commented that it depends on the venture and the stage of development: “Completely virtual is rare but so is the other side of the scale --completely vertical. Certain protocols are essential to keep in house (i.e. IP or domain expertise). However, overall most companies use more of an in-house model because what they are selling is a platform.” Dr. Kumar provided insight from the diagnostic point of view adding that in the early goings it was invaluable for his diagnostic company to leverage scientific knowledge from a more experienced company, “Be flexible and use what is most efficient at the time and don’t be afraid to change!”

Framing the entire discussion of accelerating early stage research, a recurring theme among all the panelists was how invaluable proper management and communication are. Dr. Kumar summarized this point, “Managing internal and external communication is vital, as a management team you must be clear with how your data is obtained, stored, and shared.” By drawing attention to the idea of “going virtual’, BCB hopes to empower all entrepreneurs to turn their virtual biotechs into real successes!

Kofi Gyan

Kofi Gyan, BSc., Tufts University School of Medicine Kofi Gyan is a post-baccalaureate researcher working in the laboratory of Daniel G. Jay, PhD. After earning a BSc. in Biochemistry, Microbiology, and Immunology from the University of Ottawa he was admitted into the NIH Post-Baccalaureate Research Education Program at Tufts University School of Medicine. His research involves studying the role of extracellular Heat Shock Protein 90 in exosome transport and uptake in order to investigate mechanisms regulating cancer cell invasiveness.