American biotech has traditionally been a centralized industry, with most companies clustered in a handful of cities and operating with teams of in-house scientists.
When biotech first gained its footing in the 1980s, there were good reasons for its centralized structure, including geographic proximity to the universities supplying talent and intellectual property. But recent changes — related to funding trends, an increasingly globalized workforce, the real estate market, and the popularity of decentralized models in other industries — have underscored the limits of centralization as the dominant approach. These changes, which began to surface in the last five years, were further amplified and necessitated by the pandemic.
Now, decentralization is emerging across biotech in various ways: Startups are launching outside the major hubs, sharing lab space, hiring across borders, and collaborating on research projects. We’re even seeing new types of organizations beyond traditional companies, such as decentralized autonomous organizations (DAOs), enter the drug-development game — with funding to boot.
Decentralized models are still experimental. But they lower the barrier to entry for smaller companies and harness the talents of a more diverse pool of scientists, potentially hastening the development of new drugs and, hopefully, effective cures.
So, how are biotech companies leveraging decentralization to get off the ground? And how can new founders use it to their advantage going forward? Drawing on my own experience working at biotech startups and DAOs, as well as conversations with biotech leaders exploring decentralized models (some of which have helped identify new cures), I’ve put together a guide to decentralization in biotech that covers what’s happening in the field today and where it could go in the coming years.
Coworking and cloud labs
While there are different ways to define biotech companies, most are small startups focused on developing biologic drugs. They typically conduct scientific research in-house, which requires having a dedicated “home” lab. During the pandemic, however, lab space has become especially scarce in Boston and other biotech hubs, according to a November 2021 report from CBRE, a Dallas-based commercial real estate services and investment firm. This lab grab, the report said, “is the natural result of a global push for new medicines begetting strong funding and hiring in the life sciences sector.”
Recognizing the growing expansion of biotech and the dwindling supply of available real estate, several developers started building out flexible coworking spaces to accommodate smaller teams. This “WeScience” model allows biotech startups to share offices, lab suites, and bench space, typically on a month-to-month basis. Two big players in this space are Biolabs and Alexandria LaunchLabs.
Other companies have given up physical lab space altogether in favor of a “virtual biotech” model that entails outsourcing research processes. Companies going this route pay for one or more of the following services:
- Contract research organizations (CROs), such as Charles River Labs, which can provide biotech companies with a range of support services, including preclinical to clinical development and regulatory filing. This CRO directory outlines the full range of possible services.
- Sponsored research agreements (SRAs), in which biotech companies pay academic labs to conduct research for preclinical or clinical development.
- Cloud labs, such as Emerald Cloud Labs and Strateos, which are AI-powered platforms that automate functions such as small molecule drug discovery and let researchers stop and start experiments remotely.
The longevity company Loyal illustrates virtual biotech in action. Loyal’s team of scientists oversees preclinical longevity research largely run by CROs. In the interest of “democratizing some of this hard-earned knowledge for current and future biotech founders,” Loyal CEO and founder Celine Halioua has written about the costs and considerations of using CROs, and performed a cost comparison of CRO versus in-house experiments.
Virtual biotech has a few obvious drawbacks. For one thing, the science conducted is more rigid because it needs to be pre-planned. As a result, companies might experience a reduction in raw innovation that comes from scientists having the freedom to experiment at their home labs. Another is that CRO usage itself can be tricky for new founders to navigate. Different CROs excel at different functions, and founders still often rely on word-of-mouth recommendations in deciding which one to hire for, say, a dose-finding study. So, having an established network in the industry can make a difference. Also, on the cloud lab side, big pharmaceutical companies that can afford to run regular experiments often use up the platforms’ bandwidth. In practice, that means access to cloud labs might be a barrier for startups.
Luckily, these drawbacks aren’t insurmountable. Science Exchange, a platform launched in 2011, has greatly improved access to and usage of CROs. Through its marketplace, companies can source, order, and pay for scientific services from more than 3,500 providers while also reducing the contract lift normally required. LabDAO is another company working to fill the research access gap; it’s building a marketplace where smaller startups and academic researchers can find microCROs (contract research on a smaller scale) to provide services such as bioinformatics analysis, automated cloning, and construct design. We’re still a long way off from having something like an AWS of biotech. But platforms like Science Exchange and LabDAO are gradually improving access to contract-based research.
Empowering the talent
Until recently, biotech startups needed to partner with existing pharmaceutical giants or raise capital from biotech VC firms in order to get early-stage investments. Compared to other founders, executives with decades of experience were heavily favored. But, over the past few years, the industry has observed a paradigm shift in the gating of biotech resources through two growing movements: founder-led biotech and decentralized science. Both embrace an ethos of democratizing the information needed to advance fledgling companies and their science.
While venture capital is still a big part of the equation, founders today have more funding options outside established biotech firms. Tech VCs have ramped up biotech investments, especially in startups with younger or less conventional founders. In an effort to win over sought-after startups, more funds are not only writing checks, but also offering founders hands-on business help and access to robust founder communities.
Petri, a biotech accelerator founded and funded by Pillar VC, epitomizes this approach. Petri offers a startup course for scientist entrepreneurs called Frequency, which funnels participants into a community slack channel so they can ping one another for help throughout their startup journeys. Another example is Axial, whose founder, Joshua Elkington, hosts a biotech Slack community for discussions on everything from gene therapy to hiring. It has over 10,000 members and counting.
There are many other examples of community-driven funds. This suggests a shift away from biotech investors acting as financial and informational gatekeepers. This dovetails with decentralization by enabling the formation of more companies led by a more diverse pool of founders sharing knowledge with one another.
We’re also starting to see scientists and entrepreneurs form new types of decentralized teams to accomplish shared goals. Within the biotech sector, a key question is whether these networks lead to functional cures. Two case studies suggest they can.
The first concerns Perlara PBC, a first-of-its-kind biotech public benefit corporation led by biologist Ethan Perlstein. Formerly known as Perlstein Lab, Perlara used to be a prototypically centralized Bay Area biotech company, focused on digging for cures to rare diseases in drug-repurposing studies. Then, in 2020, it reemerged as what Perlstein calls “Perlara 2.0,” with a team of decentralized scientist-consultants who work collaboratively to write roadmaps for patient families and foundations searching for cures.
The group details the current state of drug development for a given rare disease, and also creates project management plans for studies to identify therapies (often relying on CROs like Charles River Labs). It can oversee everything from sourcing drugs to spinning out companies like Maggie’s Pearl, which can then own a drug asset and oversee the clinical-testing progress. Perlara’s first therapeutic success didn’t happen overnight — it took years to get from an early drug-repurposing study to a small trial that demonstrated efficacy in two patients, and then to a Phase 3 trial (set to begin enrolling patients soon). But Perlstein hopes this template can be replicated for other patient groups across the Perlara program.
Phage Directory is another decentralized group of scientists working together to identify cures. The idea for Phage Directory began with a tweet: UCSD epidemiologist Steffanie Strathdee had put out a call to phage researchers, asking for help finding a treatment for a 25-year-old patient with a seemingly antibiotic-resistant infection. (Strathdee had previously coordinated a phage therapy for her husband, Tom, and detailed the experience in their book, The Perfect Predator.)
The tweet inspired a eureka moment: Microbiologist Jessica Sacher and her partner saw an opportunity to optimize community coordination on future “phage hunts,” and proceeded to create a list of researchers who might hold the key (or phage cure) for other patients.
To date, Phage Directory includes 448 phage researchers and 100 phage organizations. Its model is simple: a decentralized, global network of scientists with potential cures, an alert system, and a template for shepherding treatments from the lab to the exam room. This network has delivered three separate “n-of-1” cures under compassionate use or experimental therapy guidelines. In other words, they’ve produced individually tailored treatments for patients who’d exhausted all other options (like antibiotics). Phage Directory is now working on an academic medical network funded by the Australian government.
Lastly, not to be missed in the decentralized biotech space is Molecule, a company paving the way for biotech in web3. Tyler Golato, a biomedical researcher, and Paul Kohlhaas, an engineer, founded Molecule in 2019 with the goal of building an entirely new system to support early-stage drug development. The company has made impressive strides; their idea of selling research assets on the blockchain as IP-NFTs enables a new way to buy into translational research. What’s more, Molecule has launched three biotech DAOs, which function in this context as new collectives or cooperatives engineered to attract community members from various corners of the internet.
In VitaDAO, Molecule’s longevity-focused DAO, the community operates like a venture fund with a high-powered content and marketing engine attached. A deal flow working group (composed up of scientists and investors, among others) evaluate projects for funding. Community decisions are largely voted on using $VITA tokens, and much of the work “happens in public,” meaning that almost any internet-savvy individual can join the DAO’s Discord server or its working groups, or simply observe the community’s work in action.
A major draw of biotech DAOs like VitaDAO is how quickly they can get work done. In the 10 months since its launch, VitaDAO has evaluated over 60 research proposals and financed almost two million dollars worth of research across 10 projects. That’s like taking an NIH Research Project Grant — which normally gives one lab $250,000 a year for five years — and splitting the money across projects at 60 labs. (You can read more about the organization’s progress in its Community and Treasury Report.) Another advantage is that DAOs don’t have the same hiring restrictions as traditional biotech companies. This means people with diverse experiences, and at different stages in their careers, can get involved with a DAO — or several, if they want, since there’s no expectation of exclusivity. The benefits of employment differ from those of a traditional day job: You might be paid in tokens or Ethereum (or even gratitude), versus receiving a salary in U.S. dollars. But, for those who have the time, working for a biotech DAO offers a playground for scientific input, teamwork, and innovation, and even a place to learn new skills like content and marketing.
Welcoming critiques and looking ahead
Some experts are critical of the idea of decentralized biotech. There are valid reasons to support centralized systems; there may be instances where it’s cheaper for scientists to perform research in-house or more efficient to work in discrete teams. We should anticipate and discuss any good-faith critiques in order to improve the emerging decentralized system. In an ideal world, we could test hundreds of ways to get from “bench to bedside,” mixing and matching the components of each new venture for maximum efficiency. We’re not there yet, but I anticipate seeing more experimentation in years to come.
There’s a persuasive, non-technical reason to explore the decentralized approaches bubbling up: Biotech companies are in the business of finding new therapies, which hopefully lead to cures for patients who need them. Why not optimize each part of the drug-development pipeline in the interest of moving faster and more easily sharing findings around the world? If the only thing we have to lose are the gated, centralized systems we’ve known for years, that’s all the more reason to test out new ones.
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