Print
Email
Print Edition Stories
MHT's Efrain Viscarolasaga: How social networking is changing business
MHT's Marc Songini: Mass. bio firms prep for lifting of stem cell ban
MHT Editor Doug Banks on NECN: How companies are using social media
For some local life sciences companies, less is more, and being virtual is a virtue.
Given the scarcity of available cash, more companies are running their businesses in a nearly virtual state — outsourcing a host of functions, including clinical trial work, keeping few if any full-time employees and avoiding the overhead of lab and office infrastructure.
“The virtual biotech business model is definitely growing,” said Shelley Amster, director of business development at Apelles Partners, a life sciences consultancy consortium, which is itself made up of different companies and consultants in varying locations, mostly in Massachusetts.
“The venture capitalists and even the angel community have only so many dollars to invest,” said Amster, who is based in Concord. “Why waste it in real estate and lab equipment and then have to hire numerous high-end scientists that they do not need to have on board full time?”
Several virtual biotech companies she works with are focused on protecting their intellectual property and making necessary alliances with services providers until their investors can cash out via a merger or pharmaceuticals buyout, said Amster.
“Big pharma isn’t looking to buy people,” said Amster. “It’s looking for the innovation they don’t have and desperately need.”
Dispersing for dollars
“We don’t need bricks and mortar to progress. Access to the right talent is more important than the team’s physical location,” said Daniel Grau, CEO of Boston-based Cortria Corp. His company, which develops cardiovascular drugs, has been virtual since it was founded in 2005, employing fewer than 10 full-time workers in various locations. Its clinical operations are outsourced.
Yet being virtual didn’t stop Cortria from raising a Series A round, though Grau wouldn’t elaborate on the financing. “To some venture capital investors, it is becoming attractive due to its greater capital efficiency,” he said. It does, however, require discipline and focus for the employees. But most virtual companies, including his own, at some point, will probably move to a more traditional brick-and-mortar model, said Grau.
But not all. Consider Corrona Inc., a data analysis company serving the pharmaceuticals industry, which has a data center in Springfield and an Albany, N.Y., address. It also has revenue of more than $1 million, but no plans to create a headquarters, said Jim Cavan, the company’s Boston-based COO. “We’re growing effectively, managing clients and expanding our business offerings and doing everything a company with bricks and mortar does without that overhead.”
Starting virtual is a pretty easy first step for a business.
“You hit the single ball first, even if you’re looking for the home run,” said Gordon Jamieson, president of Translational Therapeutics Inc. in Arlington. The company, founded three years ago, is focused on developing its cancer therapies and diagnostics, not buying space or expensive scientific equipment. In addition to being company head, Jamieson is the only full-time and (unpaid) employee. For clinical or analysis work, a company like Translational can turn to universities or to a pre-clinical services provider such as Boston-based Wolfe Laboratories Inc. or Apredica in Watertown, he said.
Other regional companies that are in virtual mode include drug delivery technology startup Resonance Therapeutics, founded last fall by Geoffrey von Maltzahn, researcher for the Harvard-MIT Division of Health Sciences and Technology. Another is the Marlborough startup Tarpon BioSystems Inc., which offers drug-purification equipment and processes.
However, not everyone is a fan of the virtual model.
“The flexible and low-cost nature of the virtual business model is attractive,” said Douglas Fambrough, general partner at Boston-based venture capital firm Oxford Bioscience Partners LP. “But the tradeoff one makes being virtual — not having a hand-picked, full-time dedicated team doing the work who are completely committed to the success of the enterprise — is a huge price to pay.”
Comments
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.
RSS Feeds
