Allozyne Layoffs and Sacrificial Lambs

The last post was about the fallout of a merger that went sour. The CEO and four board members from company A resigned. Company B has possibly laid a few of its 20 employees off but their CEO denies the claim. The details of the merger and the subsequent fallout would be good reading for those of us interested in the business of science. It is not however, what we want to do here on the CCS. What we do here is philosophy. An interesting technology came out of Caltech that enabled one to add a non-natural amino acid to a recombinant protein. That non-natural amino acid would allow for conjugation to other proteins or PEG chains that could add some pharmacokenetic advantages to a protein. Fantastic. What happens next is of interest to the CCS.

What happens next is a business plan is written up and submitted to a venture capital group, a biotech incubator, an angel investor, a rich relative, or whoever has the money that the inventors lack. In a classic "you've got the money, I've got the brains" situation, a relationship is formed. Trust and money is given to the inventors by the investors. A meeting takes place. Where are we going to set up shop? What should we pay for rent. Who do we need to hire? Who can we put on the board and advisory committees to attract other players in the industry? In all of this shuffle it would be easy to lose sight of the original excitement of being able to stick a couple antibodies together and see what happens.

This is of interest to the CCS because what usually happens ends in failure. We ask ourselves how so much interesting science and so much money result in failure? We believe that this is no ordinary business failure. We have recently given a number to the failures of drug research ventures. A trillion US dollars has been lost! That is veritable petri dish teaming with life for a philosopher such as the CCS. I want to put that petri dish under a microscope and watch the interactions and understand what is happening. In one petri dish I have a thousand little companies. 999 of those companies die but one lives. If I look real hard through the microscope I can see a little sign and it says Amgen! What did Amgen do to survive?

What happened at Allozyne is a microcosm of the Trillion Dollar Failure that is drug research. The inventors left the business up to the Cargo Cult Leaders of Seattle and went back to Caltech. One outsider, the CEO, came from the business side of Novartis. The rest of the crew, including the chief scientific officer were selected from the usual suspects of the Seattle Cargo Cult. The CEO and the board are now in charge of turning legitimate science into a profitable business model. They need those Powerpoint slides to tell a story. The story was told to Wall Street but Wall Street didn't bite. Allozyne and Poniard leaders failed. Poniard leadership accepted responsibility and fell on their knives. Allozyne sacked a couple low level techs and offered up soundbites like, "“The syndicate is extremely excited that we are on a Phase III trajectory in 2012” and that their pitch to Wall Street was, "very well received" and that “No one here is in fact at all disappointed. We are very much looking forward to 2012. We are invigorated about the challenge ahead.”

Allozyne began with an initial investment from the Accelerator Corporation. Accelerator usually ponies up around 1 to 2 million dollars. From there Allozyne received 50 million dollars and moved into some rather swanky digs a block away from the Accelerator building. As of June 2011 they were down to 1.4 million cash on hand, leaving 49.6 million to contribute to the lost trillion dollars. I've mentioned that Allozyne is a part of a microcosm. I've mentioned that the microcosm could be thought of as a petri dish teaming with life. 1000 entities begin life in that petri dish. Rather than studying that one Amgen life form that strives, we are looking at one life form that looks sickly. We know that we must add a certain concentration of money into our petri media to keep all of the companies in there alive for a few years. We don't have a good idea what is needed to make the Amgens emerge. In fact, if Amgen were put into a modern biotech microcosm petri dish... it wouldn't survive either. Is Allozyne like an early Amgen? Are they misunderstood yet poised to one day make their detractors very sorry? Or are they dying because the management team is Cargo Cult?

It is hard to study what is happening in our biotech petri dish. Allozyne is a secretive group. One or more people were laid off but according to management it was of no consequence. It was merely a ceremonial sacrifice. Part of the cult rituals is to seek out the members who wear white lab coats and give them pink slips and watch them march out the front door with a box of their meager belongings. These sacrifices take place towards the end of the process. It is believed that the laboratory workers are causing the airplanes to not land. By removing them the investors breathe easier which relieves stress among the managers. The white lab coat clad members of the cult are like lambs. They have no power over the direction of the research they conduct on behalf of their leaders. They do what they are told and they disappear without explanation. It does not however signal the end of another dot in our petri dish. It only signals trouble.

We would like to see a research class that emerges one day with the power to fight. A small biotech is not where that power will come from. It will come from outside of the lab. Slowly people will begin to speak up about the common mistakes that we make in trying to manage science as if it were a business. Firing lab workers is like firing an automobile assembly worker for making a Yugo or an Edsel. The real culpability lies in the minds of those who design the car. The reason the airplanes do not land in our airport is not because the man in the tower is doing his job improperly. It is because Cargo Cults are missing something. That something is unknown or is purposely being ignored by the management class. One thing the are missing is the knowledge that sacrificial lambs make for a dull and timid research staff.