Friday, February 20, 2009

Q&A

Polaris' Terry McGuire on the future of life sciences industry

By Marc Songini

Video Gallery

MHT's Marc Songini: Mass. bio firms prep for lifting of stem cell ban

Rodney Brown on NECN: Hacking into medical devices

Flash Slideshow: Mass High Tech All-Stars Thought Leadership Roundtable

Related News

Innovation Notation: When does transparency trump personal privacy? [January 23, 2009]

Teague said to be leaving General Catalyst [March 19, 2009]

Hinshaw out, Cognos vet Sirianni in as Dataupia CEO [March 16, 2009]

Bakali takes CEO post at Genocea Biosciences [February 19, 2009]

Tech Citizenship: Atalasoft CEO connects with tumor sufferers through Brain Trust [November 21, 2008]

Few people have been as closely connected to life sciences entrepreneurship in New England as Terry McGuire, co-founder and managing general partner at Polaris Venture Partners in Waltham. He has invested in dozens of companies — including some outside the life sciences, such as Akamai Technologies Inc. — and co-founded three. Mass High Tech staff writer Marc Songini asked McGuire about the state of the life sciences industry today, and its future.

MHT: What makes you optimistic these days?

McGuire: Lots of things. There’s compelling technology to be proven that can truly change people’s lives, patients’ lives, and provide strong economic return to investors. If anything, you could argue Darwin was an optimist. If you think about this, some companies are attracting talent they couldn’t have four years ago because of some of the downsizing across industries. The technologies are compelling, and talent is available for some startups that is as good as it’s ever been.

MHT: Many life sciences companies are about to run out of cash soon, yes? What then?

McGuire: To use the much-quoted Mark Twain line: The news of my death is greatly exaggerated. Every company that gets started is not necessarily going to be a success. We take risks. No venture capitalist expects to bat a thousand; no entrepreneur bats a thousand. Not everyone finds a way to be successful. Capital is harder to find, but some entrepreneurs will find that capital, and other companies will not. I’m not overly concerned that good companies will have real difficulty finding capital. There will be companies that are lost, and for the individual company, that’s a bad thing; for the industry it’s not a bad thing. Great companies find ways to be successful. We’re looking at a difficult moment — but look ahead eight years. I’m very positive. With that said, this is a difficult time for sure. Many companies are reducing their spend, in the sense that if they have two or three programs, they’re focusing on the lead program. In a Darwinian way, this is a positive thing.

The industry has gone through ebbs and flows and I view this as another one. It’s too easy to lose sight of the long-term nature of the business. A lot of venture capitalists know how to deploy capital in the longer term.  We will weather this storm better than many regions because of that. I’m very optimistic.

MHT: Life sciences venture capitalists are used to waiting for a return on the investment, right?

McGuire: Being an early-stage investor means many of the things you invest in are going to require years to develop. It’s been true for 25 years, since I got in the business. Most venture capitalists have a model where they raise partnerships that last 10 years. They don’t put all the capital to work day one and don’t harvest it all in the last day. An investor isn’t expecting the capital to be locked up for 10 years. They expect a shorter period. What’s making liquidity more difficult is that capital markets are closed to IPOs and any expectation of liquidity has been frustrated over the last 18 to 20 months. However, large pharmaceutical and medical tech companies have been reasonably acquisitive.

MHT: Your thoughts on how the Obama stimulus package might help life sciences?

McGuire: I’m impressed with what I’ve seen, and support the idea of a stimulus bill, although the terms of the stimulus are changing every day. Hopefully, the stimulus will have specific support for the industry.  

MHT: What is your background?

McGuire: I have an undergraduate in physics and economics and a masters in engineering and a business degree. When I joined the venture capital business in 1985, we all were generalists. I had a portfolio that went from software companies to retail chains and cable and radio stations. It was quite diversified. In 1992, I put my hand up and was happy work to work in life sciences.

MHT: What’s exciting to you?

McGuire: A couple of things that aren’t brand new, but are more and more exciting. The whole idea of a biological system as a therapeutic continues to excite us. Another area is personalized medicine. It’s powerful because not only is it going to be helpful to determine appropriate therapeutics, but more importantly, it allows for the administration of therapies tailored for the individual. The final theme is prevention: An ounce of prevention is worth a pound of cure. The development of disease prevention is an important theme.

MHT: Your favorite personal technologies?

McGuire: Life sciences guys tend to be slower adopting new technology. I have a Blackberry and an iPhone and a notebook computer. When I first got the iPhone I thought it was really cool. I use (Nintendo’s) Wii for snowboarding.