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Thursday, June 07, 2012

Yet Another Business Model

Venture capitalists that traditionally supported such biotech companies have given up.

That's a fact folks and the usual suspects are scrambling to reinvent themselves. We see right through the cracks however. Those at the top are remaining at the top. The labs are disappearing, the jobs are disappearing and the executives continue to make the big bucks. The ones who made the decisions that led to our state of affairs are still making the decisions. The only difference is that they are making... so we are told... better decisions.

Take Kineta. Yesterdays article in Xconomy states that this is a new business model. They began with $38 million of other peoples money. They spent $10 million so far, in three years, and they have yet to start a clinical trial. They have 25 employees, they collaborate with university types, and they promise to get money back into the hands of their investors. The model is to sell the single target drug candidates after phase I trails, before the shit hits the fan. One thing the usual suspects know by now is when they shit hits the fan. The only problem is that big pharma also knows this. There is nothing new here. Kineta only seeks to get out before the usual point of failure. They still hope to participate in the same path to drug approval, just not the hard part. 

Compare Kineta's non-new business model with the genius, get-to-the-heart-of-the-matter, common sense ideas of the CCS. I see things quite differently. 

We need to address:

  1. Our industry consists of simple, complicated, complex and chaotic areas.  The science is more complicated than the business, not the other way around. 
  2. Biotechnology in general does not train it's people. We assume that people are trained for biotechnology careers at the Universities they attend.
  3. There is no method for discovery. Instead we hire PhDs and put world renowned scientists on our advisory boards.  We assume this is the scientific method.
  4. When a company dies, it is a life unexamined. We assume that the executives who ran the company into the ground learned something along the way. They are now more experienced and more capable of running a successful business as a result of their failure.
  5. There are no well defined career paths in biotech. Highly educated people are expected to be smart enough to figure out what they need to be doing on a daily basis. As a result, our experts are self appointed gurus.

We now have virtual companies, accelerator companies, incubators and other bloviators. Yet, if you look close, it's business as usual. 

Kineta will fail because:  1) The have a poor grasp on simple, complicated, complex and chaotic. 2) 3) They do not train their staff to follow the Kineta method of discovery. There is no method! 4) The executives are coming from a failed venture. They raised over $23 million for Illumigen and sold it for $9 million to Cubist. Cubist paid too much!  5) It is a collection of individuals following a chaotic path to an unknown location where they hope to find a pot of gold. 

Business as usual! Look to the skies and hope they got it right this time.

1 comment:

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