Opportunities: From PDF to IPO, One Scientist's Journey

A few months ago, I participated in a speaker's series called “Start Me Up!”, sponsored by the New York Academy of Sciences. It was there that I heard the story of Avi Spier.

Avi, like many early-career scientists, was bright, talented, and eager to make an impact on the world. Avi finished his Ph.D. at the University of Cambridge, then went to the Scripps Research Institute in San Diego, California, for a postdoc. While he was there, he joined the Technology Evaluation Group at the University of California, San Diego, which exposed him to the biotech industry and early-stage companies.

A chance encounter at a conference--one of those serendipitous events that often seem to move science forward--set our story in motion. At the conference, a scientist from Israel presented work on a neuropeptide. Avi was working on a method for identifying receptors for just this type of peptide. Could these technologies be combined to produce a therapy for degenerative neurological diseases such as Alzheimer’s?

Avi drove his Israeli colleague to the airport and, while his colleague was waiting for her flight, the two hatched a plan to start a company to develop the technology. Allon Therapeutics was born soon after. Avi was president and CEO of the new company, as well as a member of the board of directors.

Avi Spier

Avi spent a lot of time alone in his apartment during the first few months, working through licensing issues and the science surrounding the concept. Critical early support came from the Institute for the Study of Aging, which funded development of Allon's technology. It wasn't long before Allon reported its first scientific successes. Venture investments soon followed.

Allon Therapeutics went public in 2004 on the Toronto Stock Exchange. At about the same time, Avi handed the reins to experienced biotech managers, who have continued to build on the company's early successes. Apropos of last month’s column: Avi did it all without an MBA or any formal business education.

I wanted to hear more about this remarkable story, so for this month’s Opportunities column, I interviewed Avi Spier. The interview, which was conducted by e-mail, has been edited for clarity.

Peter Fiske: It sounds like you already had your eyes on the commercial side of biotechnology when you were in grad school. But, when you said 'Yes,' did you know what you were getting yourself into?

Avi Spier: Actually, following that 'yes' that you mention, the next words that came out of my mouth were, “But it’s going to be difficult.” So in some ways I did know what I was getting myself into. It was 2001, the tech bubble had just burst, venture capital (VC) was scarce, and what little biotech investment activity [there was] was going mostly into later-clinical-stage companies with quantifiable products, experienced and successful management, and big-pharma validation. I was a postdoc with no formal business training or track record, starting a biotech venture around preclinical data without pharma validation--not what most people would call bankable odds. On the other hand, the data did look promising, an extensive portfolio of literature had been built up through government funding, the IP was extensive and well managed, the technology was a novel approach to treating major neurological problems--and a lot can be accomplished through indefatigable determination.

I knew what the goal of the venture was and what the starting point was, but between those points was essentially a blank page waiting to be filled. That was part of the excitement of the project. Starting a biotech company and running it is a creative process in many senses. Starting something that didn’t exist a priori is by definition creative. But how the company is run, carries out its business, its research operations--its structure, location, size, philosophy, culture, etc.--are also creative and determined by the founders. Therefore, in starting Allon, I was acutely aware that it would be run in a style that suited me.

Peter Fiske: What was the hardest part of that first year?

Avi Spier: Perhaps that question should be rephrased to, 'What wasn’t the hardest part of that first year?'

If I have to name one thing, it was the hiatus between leaving my postdoc and having the start-up funds in the bank. By the time I left Scripps, I was quite confident that start-up funds would be forthcoming. [But] there is a chasm of difference between being confident and having the money in the bank. In the end, the initial funding took slightly longer than I had expected to arrive, and those few months of hiatus were somewhat nerve-wracking. As anyone familiar with small organizations knows, keeping everything together in times of adversity is perhaps the most difficult task.

Peter Fiske: How long was it until you got Allon funded?

Avi Spier: In all, from idea to business concept and fundable entity probably took 6 months, and I think it took an additional year for the company to be actually funded.

Peter Fiske: Who helped you along the way, and why?

Avi Spier: The Institute for the Study of Aging (ISOA) was the biggest help to the company in its early days. The reason the team at ISOA helped Allon through its start-up phase was because our interests were aligned. Allon needed funds to take its lead candidates through preclinical development stages, and the institute had funds, generously provided by its supporters, [for developing] promising new treatments for Alzheimer’s disease--treatments that were caught in the funding gap between academic science and venture-backable enterprises or pharma licensing.

However, the institute provided more than just funding. It acted as a venture investor, which meant that Allon had to make a strong business case for realizing clinical and commercial success. The institute put the company’s business plan and supporting documents through more extensive review and due diligence than typical VC deals. Although onerous at the time, [the process] later proved to be very helpful when dealing with VC firms.

Peter Fiske: Did you have any mentors or guides for handling the business questions that came up?

Avi Spier: I would say that the multiple meetings with investors and VC firms [were] probably the biggest help in honing the company’s business plan. Each investment discussion or rejection typically came with some sound advice about how to make the business case more attractive. Listening to that advice, acting on it accurately and quickly, was key. Also, San Diego is a great place to start a biotech company. There are about 600 biotech companies and life-science investment firms here, and certainly there is no shortage of experienced people here who jump at the chance to help exciting new projects take shape. Sometimes the reasons are self-interest, sometimes genuine altruism, but in my opinion, the key to receiving such business advice is to listen to everyone who has something to say, file the opinions, and make your own decisions anyway.

Peter Fiske: Tell me more about "venture philanthropies." How many of them are there?

Avi Spier: Venture philanthropies are philanthropic organizations that invest all, or a certain proportion, of their available funds into commercial enterprises where their funds can [promote] the aims of the philanthropy. For instance, ISOA provides research grants to academics [as well as venture] funds to companies to support the generation of treatments for Alzheimer's disease [AD]. Stemming from ISOA’s initial investment of about $0.5 million in Allon, tens of millions of dollars more have since been invested in the company from other organizations, much of [it] to support clinical development of the company’s AD treatment.

Traditionally, biomedical philanthropies funded research in academia with the expectation that the research would benefit basic understanding of their disease area for all to use, and that potential therapies would be outlicensed by the academic institutions to companies where they would be developed into patient benefits. The former is still a hugely valuable component of the R&D research infrastructure. However, for the latter, many philanthropies are taking a more direct approach to ensuring development of therapeutics for their patient communities through investments into commercial ventures, be they start-ups, existing biotech companies, or even large pharmaceutical companies.

There are quite a few venture philanthropic organizations now. Examples include the Cystic Fibrosis Foundation, the Juvenile Diabetes Research Foundation, and the Bill and Melinda Gates Foundation.

Peter Fiske: You said something very interesting in your presentation--that you view entrepreneurship as more than simply starting a company. Can you explain?

Avi Spier: Sure. In my opinion, entrepreneurialism is far more than the relatively narrow meaning commonly ascribed to the word in biotech, i.e., starting new commercial enterprises. I think entrepreneurialism happens at all levels within and between organizations. Given a difficult project, goal, or collaboration to work out, often people have to employ the skills usually associated with an entrepreneur to make things happen. That’s entrepreneurialism. My view is that whenever someone is championing a project, be it starting a new company or running a project of any size within an organization--and pushing it through as a driving force, creatively overcoming internal and external obstacles to add value--that is entrepreneurialism. If you believe in what you’re doing, the satisfaction of achieving the results is the same.

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