Biotech Startups: Dreams, Risk, Failure And — Sometimes — Success
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Patsy Freeland went to work for a health care startup soon after graduating from college, because she wanted to help addicted people quit their opioid habit. Her idealism didn’t last long.
One day, a little more than a year after she joined, all 60 employees were gathered into a room. "They just sat us down and they said, 'This is the end. Everybody, your last paycheck's in the back. Pack up your box and please leave,' " Freeland recalls.
Lots of people share in the startup dream. They want to invent the next Facebook or Snapchat -- or at least get in on the ground floor. They’ll make a fortune, help the world, and then be set for life.
Such startups are an engine driving the Boston area's biotech boom. No one seems to know just how many biotech startups there are here -- though everyone agrees there are hundreds -- or what their rate of failure is.
But it's widely accepted that failures like the company Freeland worked for vastly exceed successes.
"You have to be prepared for that kind of risk when you sign on," she says, raising her voice to be heard over the din of 700 others who attended a recent startup networking meet-up called the Venture Cafe.
Cambridge-Boston and California’s Bay Area are widely considered the biotech startup capitals of the United States. Both have the universities where ideas are generated, business people to run the companies and venture capitalists and bankers to provide funding.
Although there’s no all-inclusive list of local biotech startups, StartHub, an online platform supporting the region’s startup community, counts more than 2,100 startups here across all types of business sectors.
Money has poured into this region in recent years -- more than $3 billion in venture funding statewide in 2017 alone, according to the nonprofit Massachusetts Biotechnology Council -- with the promise of big payouts.
A fabulous idea is, of course, a necessary starting point for any company.
“I know that sounds so obvious, but you'd be surprised how many ideas are not fabulous,” says Abbie Celniker, a partner in the Boston-based venture capital firm Third Rock Ventures. “It’s really about having something that you know is going to have a big impact, you know is going to hit some unmet need. And you have an idea of how you're going to get there.”
The first major hurdle for most biotechs is raising money from people like Celniker. They need funding to prove out their science -- first in test tubes, then in lab animals and, finally, in patients.
Raising capital has gotten a little easier in recent years, Celniker says, but is by no means a guarantee for anyone.
“There’s a very discerning eye put on — what is it about this company that's going to allow it to succeed?” she says. “What do they know, what have they put into place to minimize the risk?”
This puts intense pressure on people working for startups. They want their ideas to work, and they have to repay investors.
At a startup, if the project doesn’t work, the workers don’t have jobs, so they’re highly motivated to get things done, says Michael Gilman, a scientist and entrepreneur, who has worked for big pharma, venture capital and startups, and now runs Arrakis Therapeutics in Waltham.
“One of the things I've learned over the years is not to be scared of hard,” he says.
About 10 years ago, Gilman quit Biogen to start a company commercializing a drug that Biogen had given up on as too difficult. He and his colleagues spent several years testing and improving the drug. Then, in 2012, Biogen bought the company and took the drug back.
“I spent a lot of time thinking about, why did that even happen? How is it that Biogen couldn't or wouldn't figure out how to do it and we did?” Gilman says.
It wasn’t that his staff was smarter than Biogen’s; many of them had come from Biogen with him. And his tiny startup certainly didn’t have more resources than giant Biogen.
In the end, he concluded that the difference was motivation. “It was an existential problem for us,” he says. “We had to figure it out or we were all going home with empty pockets.”
But even with the best science, an idea can take decades to journey from a research lab to a patient’s medicine cabinet, says Robert Langer, an institute professor at MIT who has founded 40 companies in nearly as many years.
Back in the mid-1970s, when he was a postdoc in the lab of the legendary Judah Folkman at Children's Hospital Boston and Harvard Medical School, Langer helped publish a seminal paper. But it took until 2004 -- 28 years later -- for the drug referenced in that paper to be approved to fight cancer.
“And that was Avastin, which is still one of the largest selling drugs in history,” Langer says. In addition to treating several types of cancer, Avastin has also transformed care for age-related macular degeneration, a common form of blindness.
Every biotech startup still confronts a laundry list of obstacles, says Langer, who has been called the “Edison of Medicine.”
“Those obstacles can be scientific criticism, difficulty getting grants, manufacturing hurdles, regulatory hurdles -- meaning the FDA -- clinical trials not necessarily going well, having difficulty raising money," Langer says. "On and on. It doesn't stop.”
Perhaps the biggest challenge for people involved in startups, he says, is picking themselves up after they’ve failed. Langer says he was rejected by every chemical engineering department in the country after receiving his doctorate. His first nine grant proposals got turned down. He still remembers the pain.
“I've always said that the people who often do the best are the ones that are good at dealing with failure. Success is easy to deal with,” he says. “Anybody can do that.”
No biotech escapes failure, Third Rock's Celniker says. Nor should they try to.
“If you want to innovate, you have to be willing to fail," she says. "And if you don't fail, you're probably not really innovating. You're either doing something incremental or you didn't look deep enough into what could go wrong, and it'll go wrong later.”
Celniker says she once had a company fail after going all the way through hugely expensive testing in patients. She still cringes at the thought, but doesn’t regret it.
“Am I glad I tried? Absolutely. Did I learn a lot? Absolutely did. Did the patients learn a lot? Did the next innovator learn a lot? Absolutely,” she says. “So it's part of what we do. You're not innovating if you're not failing.”
Langer says he counters his own failures by finding joy where he can -- often in front of a classroom of students.
“If one of my students gets a great job offer, if we get a grant, if we get a paper in a good journal, it makes me very happy,” he says. “Even giving a lecture and students laughing at my jokes, it makes me feel happy.”
And despite the risks, he’s still really excited about starting companies based on his science.
“I mean, I just think it's a really exciting life,” Langer says.
For her part, after getting laid off from her biotech a few years ago, Freeland retreated to the relative safety of a management consulting job. She’s planning to go to business school.
But Freeland says she might be willing to try another startup some day.
“The idea that you really get to suddenly make an impact in a place where you see that there's a need and that you can so directly do that -- there's nothing like that,” she says.