Reviews for Membrane separation

The average rating for Membrane separation based on 2 reviews is 4 stars.

Review # 1 was written on 2012-03-15 00:00:00 Monique Pettett *Gene Dreams* is an informative, journalistic account of the business of biotechnology during the initial "biomania" following Genentech's initial public offering. Written at the end of this initial bull market in 1989, Teitelman provides a financial professional's perspective on the emerging biotech industry, looking beyond the science and focusing on the often overlooked operational difficulties that stand between new biotech firms and profitability. *Gene Dreams* largely follows the narrative arc of a now forgotten, effectively un-Googleable company with the wonderfully generic name Genetic Systems. While the focus of Teitelman's account is on this single small firm, the narrative touches on many of the aspects of 1980's biomania — firms raising initial funding on public markets, vague promises that divergent business will feed into one another, several different "cancer cures" used as fundraising vehicles, and the beginnings of the now common build-to-buy model — charting a path through the broader story of the period. ## Evolution of a lifecycle In 2020, you start a biotech therapeutics company through a fairly well-defined series of steps: 1. **Idea:** Propose a new therapeutic hypothesis to treat a disease, a new method of generating therapeutic hypotheses, or a new method of building therapeutics. Ideally, match this idea with some proof-of-concept from academic work. 2. **Raise venture capital:** Pitch this idea to early stage venture capitalists. Raise a seed round ($1-5M). 3. **Hit milestones:** There are a long series of technical and operational milestones you need to meet before your new therapeutic idea will ever touch patients. In order to raise additional investment, you need to hit some of these milestones. These commonly include things like: developing a therapeutic agent for your disease biology, pre-clinical proof-of-concept experiments, toxicology assays for your therapeutic agent, demonstrating that your platform technology is superior to the current state-of-the-art along some important metric, etc. 4. **Raise more venture capital / partner with a BigCo:** Your seed round won't get you all that far in biotech. The life sciences are an expensive industry, so you'll certainly need to raise additional funding before you hit the clinic, and even before you approach the public markets. Typically, you can either sell equity in additional venture capital rounds to maintain independence (Series A+, etc.) or partner with a larger life sciences firm to do some mixture of selling equity and future royalty revenues from products and accepting something akin to contract work through a sponsored research agreement. 5. **IPO, maybe:** If your firm survives the many trials leading up to this point, you may eventually seek large quantities of funding to enter the clinic through the public markets in an IPO. Alternatively, it is common for biotech companies with near-clinical assets to be purchased outright by BigCo's — often those same partners from step (4) will negotiate such an option into their partnership arrangement. Selling a biotech in this manner is considered a win in the industry, and some firms are "build-to-buy" (really, "build-to-be-bought") from the outset. In 1983, things were a little bit more...interesting. Genetic Systems followed a playbook that went something like: 1. **Find scientist, offer Ferrari:** Two Wall St oriented brothers hear about hot biotech stocks. They want to own a hot biotech stock. They call around to some biotech insiders, learn that monoclonal antibodies are an interesting technology, and write up a vague business plan to make it big using these new tools. They raise some initial cash and hire a well-known academic to run the place by promising him double his current salary, a new Ferrari, and basically complete control. 2. **IPO:** They found a small firm IPO shop and pitched their new company — which had no products, 1 employee, and hardly anything of business plan — on the public market. They raised millions 6 months (!) after deciding to "do something in biotech." 3. **Pivot to therapeutics?:** The new firm told investors they would enter into business by producing monoclonal antibodies for use in diagnostic tests, then swiftly pivot to using those same antibodies as therapeutics. For one skilled in the art, this argument doesn't pass muster, but nonetheless the company dove headlong into diagnostics development by partnering with Syva, the diagnostics arm of Syntex. 4. **Spin out some limited partnerships:** As the initial funding from the IPO dwindled and the burn rate at Genetic Systems increased, they turned to a less common funding model. The company spun out limited partnership companies — at first focused on specific diagnostic products, and later cancer therapeutics through a subsidiary named Oncogen — and raised capital from a small number of limited partners. Due to the tax structure of the partnership, the LPs received preferential tax treatment due to the partnership's R&D losses. This structure allowed Genetic Systems to raise additional capital on the private market, at the steep price of a haircut on future revenues from any resulting products. 5. **Ride the hype, get acquired:** After 5 years in business, Genetic Systems had a few commercial diagnostic antibody tests in partnership Syva, a much larger company. The terms of that deal gave Syva **95%** of the profit from the tests, such that Genetic Systems was still losing money every month. Nonetheless, they found a positive ending. A rival monoclonal antibody company called Hybritech was bought out by Eli Lilly, the stalwart pharmaceutical firm from Indianapolis. This sent a shock through the pharmaceutical management teams and inspired a sort of fear-of-missing-out. Bristol Myers (now Bristol Myers Squib (Celgene)) came knocking and [bought Genetic Systems for ~$300M]() in the late 1980s, despite their lack of profitable products and modest at best therapeutics portfolio. Biomania indeed. The story of Genetic Systems is both a fun romp through business history and an instructive view to t[he other side of Chesterton's fence](). Biotech companies in 2020 have remarkably similar trajectories, begging the question: *Could this be done differently?* The first biomania bull market provides us an answer: *Sure, but it didn't work out so well in the past.* ## Business Lessons Despite it's chaotic development, I think there are a few lessons we can extract from Genetic Systems. ### Beware constrictive partnerships Genetic Systems built their early business and reputation by partnering with Syntex, a much larger company. This deal provided both immediate financing and credibility to the newly formed firm. However, the Genetic Systems leadership auctioned off the future of the company before it really started. Because Genetic Systems carried so much risk early on, they needed to offer their partner 95% (!) of the profit from their initial products, crippling the future development of the company as an independent entity. This failure mode is facially similar to startups outside biotech that raise too much venture capital in their early stages, forcing excessive dilution on the founders and early employees that compromises incentives later in the firm's development. ### Science ≠ Business Genetic Systems *did* manage to produce new monoclonal antibody-based diagnostics with some advantages over the existing tools. However, this was insufficient to capture meaningful market share for the main business line they focused on (bacterial diseases). Why didn't customers want these superior products? Genetic Systems focused on too narrow a definition of superiority. Their tests were faster and often more sensitive and specific. However, they didn't provide customers with information on the antibiotic resistance properties of a sample like traditional culture tests, required expensive microscopy equipment most labs didn't have, and weren't automated like competing products from Abbott or Beckman. Each of those features were more important to customers than marginal improvements in time-to-result or sensitivity/specificity metrics. Who wants a marginally better test if it only gives you half the information you need and takes much more effort to run? Genetic Systems also had difficulty producing the tests it did manage to sell. Until late in the company's history, no one in management had a background in operations or manufacturing. This led them to commit unforced errors, like buying a large space in Seattle for manufacturing that lacked absolutely essential features for a manufacturing facility (loading docks, storage space). Too often in Genetic Systems' story, the key scientific leaders assumed that if they hit the scientific milestones the actual "make money" part of the business plan would auto-coalesce into existence. Alas, that is not the world we live in. ### Team building is a value driver Bristol's acquisition of Genetic Systems was driven by monoclonal antibody FOMO, but one has to ask — given that Genetic Systems had few actual products, what was Bristol buying? The simple answer is that they were interested in the scientific team Genetic Systems had assembled. Despite their business failings, the former academics running the firm had recruited top-notch molecular biologists like George Todaro (formerly of NCI, first proposed oncogenes, created the 3T3 cell line). Bristol at the time lacked a core competency in the emerging field of molecular biology, and saw the Genetic Systems purchase as an acqui-hire of a pre-built team. *The scientific team recruited by a small firm is itself an asset.* This insight is hardly unique to Genetic Systems, but their generous acquisition terms in light of their...modest...product portfolio make the material implications of the adage highly apparent.

Review # 2 was written on 2015-04-10 00:00:00 Losson Leonard Great book, great history in a niche space...great to look back on the industry and see how it has progressed