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Nothing Ventured - Michael Greeley

June 17, 2004 | A few days before running the 2004 Boston Marathon, and then after the race, I had some blood drawn to study biomarkers pre- and post-excessive and strenuous activity. "The ability to quickly test for the presence of troponin has revolutionized cardiac care," says Malissa Wood, a cardiologist at Massachusetts General Hospital. "It's the difference of whether we admit the patient or send them home."

Biomarkers are a hot topic among venture capitalists these days. Roger Dowd, CEO of Clinical MicroArrays, says, "The whole field is developing around the use of biomarkers ... 2004 is the year of the biomarker." While biomarkers are becoming increasingly important in drug discovery and delivery processes, there is great debate about the best business models for marketing the related tools.

"The whole field is developing around the use of biomarkers ... 2004 is the year of the biomarker."
Roger Dowd, Clinical MicroArrays
Numerous early-stage tools companies have been funded to develop appropriate platforms. Laboratories are searching their compound databases to determine whether any of their chemical entities are appropriate analytes. And pharma and biotech companies have reconfigured themselves to incorporate biomarker functionality.

However, Frank Zenie, former CEO of Waters and founder of VelQuest, a compliance software vendor, cautions that while "understanding biomarkers will have enormous relevance, pharma will need to have big successes before there is widespread adoption" of new tools platforms. It is a concern shared by the venture community: What does the market adoption curve look like over the next few years?

The timetable for development of the larger biomarker universe hinges chiefly on the role of the FDA. Drug discovery is a field where successes are few and FDA complications occur frequently. Caroline Popper, a consultant who worked at Becton Dickinson and MDS Proteomics, is convinced that while "pharma has accepted the widespread use of biomarkers, implementing it is another story ... There is evidence that the FDA is holding out a carrot for pharma to use biomarkers in the form of shorter approval processes."

But here is the catch: "Pharma will adopt widely only when there is proven clinical success," says Meeta Patnaik, senior vice president at Pathway Diagnostics, a company developing biomarker assays. There are many definitions of success, such as simply getting to a Phase I study or reducing the number of submissions per drug. From a venture capitalist's perspective, both imply extended timelines with few interim milestones (which typically indicate progress).

Says Dowd: "Aging demographics, pressures to reduce healthcare costs, and demands to increase drug discovery productivity support the need for diagnostic assays based on biomarkers." Arguably, the widespread adoption of affordable biomarkers in drug discovery and point-of-care treatment is just one milestone along the path to personalized medicine.

So will the venture community continue to support these emerging biomarker platforms? The adventurous investor would say yes. Venture investors like industry sectors that exhibit powerful growth trends, have significant sources of patentable innovation, and serve clear and important needs.

Unfortunately, it is not that clear-cut. Entrepreneurs will need to address real concerns, such as the ultimate response of the FDA. Given the capital intensity of both product development and distribution, what will be the role of corporate partnerships? And what will those economic models look like? Investors have been slow to embrace platform tools companies for that very reason. And lastly, like a gambler, you will need to handicap the larger universe and your company's place in it.

Cooper sums it up nicely: "The biomarker craze is in its infancy, and, to be fair, our business has program cycles of seven to 10 years before we get broad and meaningful feedback to assess performance."

As any gambler would say, "Place your bets."



Michael A. Greeley is managing general partner of IDG Ventures, a global family of funds operating in North America, Europe, and Asia, with approximately $600 million under management. E-mail: mgreeley@idgventures.com. 






PHOTO ILLUSTRATION BY ALEX NABAUM




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