Business

Scott Kirsner | Innovation Economy

Spinning the roulette wheel in life sciences casino

Casino gambling has been legal in Massachusetts for more than three decades. We just call it the life sciences industry.

If you start to snooze or have stressful flashbacks to sophomore biology when you hear the term “life sciences,” let me break it down for you: Chips are plunked down every day on new treatments that could extend your life or save someone you love. And sometimes, players decide to cash out or find another game.

Some recent examples: French drugmaker Sanofi last month cut about 100 jobs at a Framingham research site working on new cancer drugs. Earlier in March, Merck eliminated an entire team in Lexington that was designing antibiotics to fight superbugs. Governor Charlie Baker is mulling the future of the Massachusetts Life Sciences Center, a $1 billion project started by his predecessor. In a budget plan released this month, he didn’t set aside any money for it.

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Earlier this year, Third Rock Ventures shut down Ember Therapeutics, a Watertown startup that raised $34 million to explore new treatments for diabetes and obesity. Incidentally, Third Rock, a Back Bay firm that has hit it big with a half-dozen publicly traded biopharma businesses, was born over conversations at the Bellagio in Las Vegas, between sessions at the blackjack table.

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Most mortals would crack after a few months of working in life sciences. Brilliance is table stakes, and it helps to be lucky, too.

You wait years before seeing whether your product will perform in humans — and it could prove harmful. You need approvals from research review boards or the Food and Drug Administration at just about every step of the process. And you need serious money: a 2014 Tufts University study estimated that the average cost of shepherding a new prescription medicine to market is $2.6 billion.

Boston has boomed for a decade now, in part because entrepreneurs and venture capitalists here are very good at bringing scientific breakthroughs out of university labs and turning them into something that has promise as a drug.

Often, big pharma companies funnel money to these startups as part of collaborations, or through their own venture capital divisions. Sometimes they acquire them.

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Small biotech companies today “are way out in front of pharma,” says Tom Hughes, chief executive of Cambridge-based Zafgen, and a former executive at Novartis. “So the innovation is now outside of pharma rather than inside their R&D labs. That’s why you see them buying biotech companies like Cubist, which have actual drugs on the market.”

In December, Merck paid $9.5 billion for Cubist Pharmaceuticals — then promptly pink-slipped 120 researchers.

Why? “Products mean profit; teams mean costs,” explains Michael Gilman, a longtime biotech research executive running a Cambridge startup called Padlock Therapeutics.

In other words, a product on the market — or on the verge of FDA clearance — is more of a sure thing; a team of researchers toiling away is a gamble.

So we seem to be living in a world where big pharma is making lower-risk, lower-return bets — like putting money on red or black at the roulette table — while startups are more willing to throw down chips on a single number. (Gilman and Hughes both predict that many of the recently laid-off researchers will be scooped up by startup companies, including theirs.)

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The quasi-public Massachusetts Life Sciences Center supplied grants and loans to help some of these startups.

A product on the market — or on the verge of FDA clearance — is more of a sure thing; a team of researchers toiling away is a gamble.

It also promoted collaborations between for-profit companies and academic institutions. Alnylam Pharmaceuticals chief executive John Maraganore notes that it was launched amidst the latest recession, providing not just money but visibility for the state’s life sciences cluster. “The industry is on very solid footing right now,” Maraganore says.

Janice Bourque, a former head of the Massachusetts Biotech Council who is now a managing director at Hercules Technology Growth Capital in Boston, says having the agency vanish entirely would be a shame, in part because it has been a key point of contact for international and out-of-state companies considering a presence in Massachusetts.

For certain reasons, I don’t love the casino metaphor for life sciences. It trivializes the long, hard, neuron-sapping, fulfilling work of nudging drugs out of a lab and into your neighborhood Walgreens. And it doesn’t capture the desperation of families waiting for new treatments.

But it does hint at the long odds of success, and the huge amounts of money swirling around the industry. (Biotech companies raised $6 billion in venture capital last year; a single mega-pharma company can spend more than that on research in a year.)

There is also in life sciences an ineradicable mind-set of wanting to win. Badly.

Randall Carpenter was the cofounder and chief executive of Seaside Therapeutics, a Cambridge company that, when I visited it in 2011, was hard at work on drugs to treat autism and a related genetic disorder called Fragile X.

Seaside’s most advanced program, a drug dubbed STX209, didn’t hit the main goals in a clinical trial, though it seemed to produce improvements in some patients. In late 2013, after spending more than $90 million, the 30-person company shut down when it couldn’t attract more funding.

But Carpenter still believes in the science Seaside worked on for eight years.

He thinks it will take a startup to bring better autism treatments to market. “Pharma companies don’t want to be trailblazers,” he says. So last week, he was at an investment conference in Boston, hoping to raise money to take another chance.

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner and on betaboston.com.